Crypto Prices Rise 3% After Fed Decision, But Face Downside Risks

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) prices experienced a modest increase on Thursday following Jerome Powell’s statement that inflation would be transitory. BTC price approached the significant resistance level at $86,000, while ETH rose to $2,000 and XRP hit $2.5. This price movement occurred as the S&P 500 index and gold prices surged, raising questions about how these blue-chip crypto market coins would react to the broader market trends.

The S&P 500 index, which tracks the performance of the largest US companies, rose to $5,700, marking a more than 3% increase from its lowest point this month. Other major American indices, such as the Dow Jones and the tech-heavy Nasdaq 100, also saw significant jumps. Concurrently, gold prices continued their upward trajectory, reaching an all-time high after three consecutive weeks of gains, making it one of the year’s best-performing assets.

Following the Federal Reserve's decision to keep interest rates unchanged and hint at tapering its quantitative tightening process, US stocks and gold prices continued to rise. Jerome Powell's statement that Trump tariffs would cause transitory inflation suggested that the Fed might consider delivering more rate cuts this year. However, Mohamed El-Erian criticized this view, stating that it was too early to confidently assert that the inflationary effects would be transitory, given the uncertainties and the Fed's past policy mistakes.

The surge in the S&P 500 index and gold prices is seen as bullish for crypto prices like BTC, ETH, and XRP, as these assets have some correlation with traditional financial markets. However, technical analysis points to potential uncertainties ahead for BTC. The formation of a death cross pattern, where the 50-day and 200-day Weighted Moving Averages crossed, and a rising wedge pattern, which often leads to a bearish breakout, suggest that BTC price could face downside risks. If these patterns hold, BTC price could potentially crash to $73,587, the highest point in March last year.

ETH price, while bouncing back from its lowest point this month, remains below the crucial resistance level at $2,138. This level is significant as it was the neckline of the triple-top pattern at $4,000. The bearish outlook for ETH price will persist as long as it stays below this resistance level and the 50-day moving average at $2,300. Further downside will be confirmed if ETH price drops below $1,763.

Ripple (XRP) price rose following the conclusion of the SEC vs Ripple case. However, the coin has struggled to move above the resistance at $3, which is a make-or-break level. A clear bullish outlook for XRP will be confirmed if it rises above this level, as it represents the right and left shoulders of the head and shoulders pattern. Conversely, there is a risk that XRP will resume its downtrend if it crashes below $1.9, the neckline, potentially dropping to $1.

In summary, while the crypto market, US stocks, and gold prices rose after the Fed decision, crypto prices like Bitcoin, Ethereum, and XRP may struggle to sustain these gains, potentially leading to an eventual crash. The technical analysis suggests that these cryptocurrencies face significant downside risks despite the bullish sentiment in traditional financial markets.