Fed chair Jerome Powell’s speech was anything but good news for the crypto markets. Bitcoin and the rest of the crypto market were showing strong rallies because of favorable inflation data. Bitcoin went up by 4% while Ethereum went up by more than 5%.
However, Powell took an aggressive stance in his Jackson Hole speech. As a result, Bitcoin has fallen close to 6% in the last 24 hours. It is currently trading at $20.2K. Meanwhile, Ethereum has slipped close to 10% to trade at $1,503. It is highly likely to drop below $1.5K.
Two Opposite Forces At Play
The market reacted to two very different forces at play. On the one hand, the PCE data was revealed to be lesser than expected. This is the second straight data, after the CPI data of August, that showed cooling inflation. The markets reacted favorably to both of those data reveals.
The expectation was that the Federal Reserve would pivot from its policy of Quantitative Tightening and interest rate hikes.
However, key Fed officials, even dovish ones like Minneapolis Fed president Neel Kashkari, took an aggressive stance. Jerome Powell took an unmistakably tough stance as well. He revealed that fighting inflation is the main objective of the Fed. He warned households and businesses of impending pain.
The market reacted sharply and fell significantly. The S&P 500 also fell by more than 3%. Experts believe Powell’s words are a tool to curb consumer and business enthusiasm. If so, they were a marked success.
Can Bitcoin Rebound
Crypto influence Lark Davis revealed that Powell’s 10-minute speech erased about a trillion dollars from stocks and crypto. However, Michael van de Poppe, the CEO of Eight Global, has offered some hope.
According to him, the Fed cannot continue with its hawkish policy. If so, Bitcoin and Ethereum can bounce back as future inflation data reveal cooling inflation.