Bitcoin
Bitcoin to trade sideways until Fed meeting, says crypto exec
Main conclusions
- Bitcoin fell 2.7% following Fed Chair Powell’s comments on keeping interest rates higher.
- Cryptocurrency markets face potential volatility due to the Fed’s cautious approach to rate cuts.
Share this article
Fed Chairman Jerome Powell spoke in Sintra yesterday and reinforced his moderate tone recently. Powell stressed that the Fed needs to be more confident before cutting interest rates, highlighted that a 4% unemployment rate is “still too low”, the return of disinflation and that he does not see inflation of 2% this year or next.
As a result, Bitcoin (BTC) has seen a 2.7% pullback over the past 24 hours and has been losing ground above the $60,000 price level for most of Wednesday. Furthermore, the outlook does not look bleak only in the short term following Powell’s remarks.
Ben Kurland, CEO of DYOR, points out that disinflation is generally considered a favorable indicator, but the Federal Reserve’s insistence on requiring more collateral before cutting interest rates indicates that stability in the economic environment has not yet been achieved. “This prevailing uncertainty is likely to result in volatility in the crypto markets,” he added.
Notably, Kurland said the Fed’s projection that 2% inflation will not be achieved this year or next, combined with a very large and unsustainable budget deficit, raises concerns about long-term economic stability.
Furthermore, while a 4% unemployment rate shows resilience, it also implies that the Fed may keep interest rates higher for longer, which has traditionally hurt investments in riskier assets like cryptocurrencies.
“Overall, Powell’s cautious approach suggests that immediate rate cuts are off the table, which should lead to sideways or bearish trends in cryptocurrency markets until the Fed meets again to reassess the situation.”
Share this article