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Bitcoin Likely to Move Steady Until Fed Meeting, Crypto Executive Says
Key points to remember
- Bitcoin fell 2.7% after Fed Chair Powell’s remarks on keeping interest rates higher.
- Cryptocurrency markets face potential volatility due to the Fed’s cautious approach to rate cutting.
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Fed Chairman Jerome Powell spoke yesterday in Sintra and reiterated his moderate tone of late. Powell reiterated that the Fed needed to be more confident before cutting interest rates, stressed that a 4% unemployment rate was “still very low,” that it marked the return of disinflation, and that he did not expect 2% inflation this year or next.
As a result, Bitcoin (BTC) has seen a 2.7% decline over the past 24 hours and has lost the $60,000 price level for most of the day on Wednesday. Moreover, the outlook does not look bleak only in the short term after Powell’s remarks.
Ben Kurland, CEO of DYOR, points out that disinflation is generally considered a positive indicator, but the Federal Reserve’s insistence on requiring more assurance before lowering interest rates indicates that stability in the economic environment has not yet been achieved. “This current uncertainty is likely to lead to volatility in the cryptocurrency markets,” he added.
Kurland said in particular that the Fed’s projection that 2% inflation will not be reached this year or next, combined with a very large and unsustainable budget deficit, raises concerns about long-term economic stability.
Additionally, despite a 4% unemployment rate showing some resilience, it also implies that the Fed could keep interest rates higher for longer, which has traditionally held back investment in riskier assets like cryptocurrencies.
“Overall, Powell’s cautious approach suggests that immediate rate cuts are pretty much out of the question, which should lead to sideways or bearish trends in cryptocurrency markets until the Fed meets again to reassess the situation.”
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