Federal Reserve Chairman Jerome Powell said there was no need for further rate cuts, a comment that triggered a sharp drop in Bitcoin prices
Bitcoin (BTC) appears to be losing steam following the latest U.S. inflation data and comments from Federal Reserve Chairman Jerome Powell on market expectations for future interest rates. The Fed Chairman’s statement came a week after the central bank implemented its second rate cut of the year.
Fed Chairman discusses next interest rate trend
In his speech, Fed Chairman Powell said that economic conditions show that further interest rate cuts are not urgent. The Fed Chairman said that the strength of the economy is encouraging and will monitor the economic situation in a timely manner. The essence of this is to ensure that inflation remains within an acceptable range.
As reported earlier today, the US PPI inflation reading came in at 2.4%, beating consensus expectations. PPI is one of the Federal Reserve’s favorite indicators of market strength. PPI’s proximity to the 2% inflation range is a good sign.
When the Federal Reserve cut interest rates by 0.25% last week, many speculated that the Fed could cut rates further this year. In a speech in Dallas, Jerome Powell said the Fed will continue to monitor market data to guide its next decision.
Although most inflation measures are broadly positive, Powell said he expects volatility ahead.For more than four years, the Fed has taken a hawkish approach to interest rates.When other central banks implemented rate cuts, the Fed did not follow suit.
While comments from Federal Reserve Chairman Jerome Powell removed doubts about an immediate rate cut, the picture for next year remains uncertain.
Bitcoin and Crypto Market Reactions
After a turbulent week that saw Bitcoin prices surge to highs above $93,000, it is now facing its first major correction. The speech by the Fed Chairman had a negative impact on investors, and some are now taking profits from their accumulated gains.
At the time of writing, Bitcoin’s price has broken the $88,000 support level and is trading at $87,328, down 3.12% over a 24-hour period. The top currency has been trading in a narrow range, from a low of $87,583.99 to a high of $91,756.22.
Although XRP’s price jumped to $0.8, its highest level so far this year, its gains are quickly falling back. Ethereum (ETH), Solana (SOL), and Binance Coin (BNB) are also seeing gains in line with Bitcoin’s.
It is understandable that the market is in a mild panic. A pause in rate hikes could make traditional assets more attractive to investors. In doing so, Bitcoin could lose its appeal as an inflation hedge. It could also be a muted reaction to the news, as BTC investors are likely focusing on positive growth indicators in the industry.
