Cryptocurrency prices rally on banking sector concerns

Cryptocurrency prices rallied unexpectedly on Tuesday. Economic uncertainty is causing volatility in stock markets and crypto markets. Risk sentiment soured on Monday after the collapse of the First Republic Bank, pushing cryptocurrency prices down. On Tuesday, the stock prices of two more banks plunged. 

The recent banking crisis has undermined trust in the banking system, raising the appeal of investing in less conventional assets, such as cryptocurrencies. Many investors have turned towards cryptocurrencies fearing a globalised meltdown in the banking system. Renewed concerns about a banking sector meltdown, however, have caused turbulence in crypto markets. 

In addition, US Treasury Secretary Janet Yellen in a letter to the US Congress warned that the office would not meet all US government obligations by June 1. Fears of a US debt default are mounting, but crypto markets have benefitted, at least temporarily, from the resulting market turmoil.

Increased rate hike expectations put pressure on cryptocurrency prices. The Federal Reserve raised interest rates by only 25 basis points at its meeting in March, bringing the benchmark interest rate to a target range of 4.75% to 5.00%. Market odds are currently in favor of another 25-basis point rate hike at the Fed’s next meeting on Wednesday. 

Bitcoin price rallied on Tuesday, touching $28,700. If the BTC price declines, support can be found near $27,000, while resistance may be encountered near $30,000. 

Ethereum price also gained strength on Tuesday, climbing to the $1,870 level. If Ethereum's price declines, it may encounter support near $1,780, while if it increases, resistance may be encountered at $1,960.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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