Crypto Today: Bitcoin, Ethereum, XRP eye next leg up on growing risk-on sentiment
- Bitcoin rises above $117,000 after the Federal Reserve interest rate decision and the dot plot's dovish outlook.
- Ethereum steadies around $4,600 despite minor ETF outflows.
- XRP bulls regain control of the trend, targeting a breakout toward the $3.66 record high.
Bitcoin (BTC) edges higher above the $117,000 level on Thursday, buoyed by growing bullish sentiment in the broader cryptocurrency market. The uptick in the BTC price is accompanied by steady increases in altcoin prices, with Ethereum (ETH) and Ripple (XRP) poised for a short-term breakout toward their record highs.
Market overview: Crypto markets recover on improving market sentiment
The United States (US) Federal Reserve (Fed) 25-basis-point interest rate cut on Wednesday was widely expected, but what caught the attention of investors was the dot plot, which showed that most Fed policymakers expect a rate cut at each of the remaining meetings of the year.
The 25 bps cut has brought the benchmark interest rate to a new range between 4.00% and 4.25%, a decision approved by 11 of the 12 members of the Federal Open Market Committee (FOMC), citing a softer labor market, a higher unemployment rate, and sticky inflation.
Participants in the cryptocurrency market welcomed the rate cut decision, fueling speculation in riskier assets. Wednesday’s decision has laid the foundation for two more rate cuts this year.
Chart of the day: Bitcoin eyes $120,000 breakout
Bitcoin has settled above the $117,000 level, buoyed by strong risk-on sentiment as investors prepare for the potential impact of the upcoming rate cuts on riskier assets.
The Relative Strength Index (RSI) recovery to 61 from a low of 37 on August 31 indicates bullish momentum is building. Higher RSI readings, approaching overbought territory, would back the steady risk-on sentiment, increasing the chances of Bitcoin price breaking above the $120,000 hurdle.
Traders will look for a buy signal from the SuperTrend indicator to ascertain BTC’s ability to sustain the uptrend, aiming at its record high of $124,474 reached on August 14.
Still, if investors book early profits, attention could shift to tentative support levels such as the 50-day EMA at $113,804 and the 100-day EMA at $111,613.
BTC/USDT daily chart
Altcoins update: Ethereum, XRP eye new all-time highs
Ethereum is on the verge of breaking above a descending trendline resistance, which has been in place since the smart contracts token hit a record high of $4,956 on August 24.
The uptrend is supported by key upward-facing moving averages, including the 50-day EMA at $4,229, the 100-day EMA at $3,786, and the 200-day EMA at $3,327.
These moving averages serve as tentative support levels if profit-taking and unexpected marketing dynamics trigger a major sell-off.
The RSI position at 57 indicates a potential extension of the leg up toward overbought territory, which could reinforce bullish momentum. A breakout above the trendline resistance and the supply areas between $4,800 and the record high of $4,956 would usher in a new era for Ethereum, potentially above the $5,000 psychological level.
ETH/USD daily chart
However, it is worth mentioning that Ethereum spot Exchange-Traded Funds (ETFs) saw minor outflows of $1.89 million on Wednesday, extending the bearish streak from Tuesday.
If institutional investors choose to stay on the sidelines and perhaps reduce their exposure, a major upswing above $5,000 could be a pipe dream, with the Ethereum price likely to favour a correction below the 50-day EMA support at $4,229 to collect more liquidity before making another recovery attempt.
Ethereum ETF stats | Source: SoSoValue
As for XRP, bulls are showing strength above the $3.00 level, with the 50-period Exponential Moving Average (EMA) at $2.95 providing additional support. A recovery of the Relative Strength Index (RSI) on the daily chart to 58 from 51 on Monday supports XRP’s short-term bullish potential.
XRP/USDT daily chart
A bullish reversal above the next key hurdle at $3.18, which was last tested on Saturday, would boost the chances of a bullish outcome toward the round-number supply area of $3.50 and the record high of $3.66.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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