The declarations of the president of the Federal Reserve, Jerome Powell, have generated greater volatility in the financial market. In his speech at the Thomas Laubach Research Conference, Powell hinted that the Fed may hold back on rate hikes because of “developments” in the banking sector that are affecting credit conditions and could impact economic growth and inflation.
This has caused uncertainty among investors and has generated reactions in the cryptocurrency market. In this article, we will take a look at the main points raised by Powell and how the crypto markets have reacted.
Inflation and the Federal Reserve’s stance.
Powell noted that bringing inflation down will take time, but the Fed is reconsidering its stance on monetary policy tightening. The Fed chair mentioned that the risks of doing too much or too little are becoming more balanced.
While acknowledging the uncertainty regarding the lagged effects of tightening and the extent of credit tightening due to recent banking stress, Powell said the Fed’s decision will depend on the state of the economy and could change in the event of further shocks.
Impact on the cryptocurrency market.
Powell’s remarks had an immediate effect on the cryptocurrency market. Bitcoin, the flagship cryptocurrency, experienced a spike in volatility and briefly broke the $27,000 barrier, before falling to a 24-hour low of around $26,718.
However, despite the volatility, the market was optimistic about the Fed’s future actions, which was reflected in a bullish Bitcoin trend in the hours after Powell’s speech. Ethereum also experienced similar volatility, but its price range was tighter. Despite the initial drop, Ethereum remained in the green, trading near its 24-hour high..
Positive outlook in crypto markets.
Most of the major cryptocurrencies posted a positive rise in price action after Powell’s speech, suggesting a general sentiment of optimism in the crypto markets. Although volatility has remained, especially in Bitcoin and Ethereum, the uptrend persists. Cryptocurrency investors seem confident that the Fed’s actions will be supportive of growth in this emerging market.
Jerome Powell’s statements about the possibility of stopping interest rate rises have generated uncertainty in the financial markets, which has translated into greater volatility. The impact on the cryptocurrency market has been mixed, with immediate and mixed reactions on Bitcoin and Ethereum.
However, despite the volatility, The crypto markets are showing a general sentiment of optimism, with most major cryptocurrencies seeing a surge in price action. This reflects investors’ confidence that future Fed policies will be conducive to growth and stability in this emerging market.