Bitcoin Price Crumbles After Powell Says Fed Rates May Continue To Increase
Bitcoin prices fell about 5 percent to $20,822 after Federal Reserve Chairman Jerome Powell spoke in Jackson Hole, Wyoming, on Friday, saying the central bank would “use its tools decisively” and that it would take time to fight inflation.
Powell spoke briefly at the event and discussed the importance of price stability. He said it was “the foundation of the economy” without which the economy would benefit no one.
He stressed that price stability must be restored and maintained, but until the economy reaches that point, “households and businesses will experience some pain.”
“These are undesirable costs associated with controlling inflation. However, failure to restore price stability will lead to more pain.”
Bitcoin Price Immediately Reacts to Powell’s Address
This year, bitcoin prices have been hit by massive market liquidations. The asset is 70% below its all-time high of $69,045 last November.
Bitcoin is trading at $20,229 as of this writing, down 3.4 percent over the past seven days, according to Coingecko.
The rest of the crypto market is in deep red after Powell’s speech. Bitcoin prices took an immediate hit after Powell’s speech, while the S&P 500 fell more than 2 percent in tandem with the cryptocurrency market.
The second-largest cryptocurrency, ether, fell nearly 5 percent to a 24-hour low of $1,595 from $1,687 on Friday morning. Cardano, Polkadot and Solana are all down around 4% over the past 24 hours.
U.S. inflation at four-year high
The Federal Reserve has been raising interest rates this year to tame inflation, which is at its highest in 40 years. That led to a stronger dollar, while other markets, such as U.S. stocks, suffered losses as investors fled risky assets on economic pessimism.
Powell said the FOMC’s decision to raise rates by 50 or 75 basis points at its meeting next month will largely depend on “the general picture of incoming data and changing forecasts.”
After a modest bull run in recent weeks, the price of Bitcoin has reached $24,000. Nonetheless, Bitcoin’s price was trending lower as markets closed over the weekend.
Meanwhile, Bitwise CIO Matt Hougan said market watchers will continue to focus on Fed comments, with Powell’s Jackson Hole speech likely to set the tone for monetary policy for the rest of 2022.
BTC total market cap at $951 billion on the daily chart | Source: TradingView.com Featured image from Forbes, chart from TradingView.com