This week in Crypto: prices pull back ahead of central bank decisions

The run-up in Crypto assets has taken a pause, ahead of major central bank meetings this week. In this week’s Crypto Verse, we look at what could drive crypto assets in the week ahead and dive into the charts of Bitcoin, Ether, and the Crypto 10 Index.

Sentiment cools ahead of central bank decisions

Crypto prices have pulled back this week, as investors steel themselves for a batch of central bank policy decisions.

The European Central Bank, the Bank of England, and (most importantly) the US Federal Reserve will meet at the end of the week, with all three expected to raise interest rates. The US Federal Reserve is tipped to lift the Federal Funds Rate by 25 basis points to 4.75%, with the central bank’s guidance regarding its path forward for policy the key issue for market participants.

So far in 2023, crypto has been the best-performing asset class, according to research released by Goldman Sachs last week. With several days left in the month of January, Bitcoin had added 27% to its price YTD, with a risk-adjusted return of 3.1%.

To this point, this outstrips the risk-adjusted return of other risk assets like high-yield credit and emerging market equities.

Three cryptos to watch

• Bitcoin

Bitcoin prices have consolidated in recent days, as upward momentum moderates. There’s a bearish divergence between price and the daily RSI, suggesting that the crypto’s short-term uptrend could reverse. Support currently appears to be around $22,700 while sellers have emerged around $24,000 in this recent rally.

Bitcoin daily chart

• Ether

Ether's price action is showing a similar loss of upside momentum. The daily RSI has fallen from overbought territory, signalling a possible pullback. Price action points to consolidation however, the first level of support appears to be around the 20-day moving average, with $1500 a key level of support and resistance. On the upside, $US1650 looms as technical resistance.

Ether daily chart

• Crypto 10 Index

The Crypto 10 Index is also signally a loss of momentum. The daily RSI is diverging with price and suggesting a possible pullback. 7131 is the key level to watch on the downside in the short term.

Crypto 10 Index daily chart