Today, at 10 A.M ET, Federal Reserve Chair, Jerome Powell, gave a talk regarding squashing the inflation rate down to the two percentage range always intended. According to him, the interest rate will continue rising until inflation gets put to bed. Almost immediately after his speech, the market took a sharp downturn.
A look at previous weeks’ price action shows that the crypto market had been rallying for some time now due to previously auspicious inflation information. Bitcoin (BTC) had gone up by 4%, while Ethereum (ETH) had also risen by over 5%. But, the FED Chair’s speech today sent the entire market, from stocks to crypto tumbling.
Data reported that Bitcoin declined by 6%, placing the price slightly above 20k. At press time, Bitcoin was trading at $20,1190. As for Ethereum, it dived by 10% and started trading around $1,503. Also, S&P 500 dropped by more than 3%.
Catalysts of The Fall In Bitcoin Price
One of the triggers behind the recent dump was the Personal Consumption Expenditure price index in its release was considered lower than what they had anticipated. Some weeks back, after the PCE data initially dropped amidst the market meltdown, the result showed that inflation had begun debilitating. As a result of the information, the market acted nicely, causing asset prices to rally.
People expected the FED reserve to bottom down on interest rates given what seemed like an improving economic condition by the inflation rate.
Another factor was the unyielding positions of the top FED officials in the decision to combat inflation hawkishly. Fed President of Minneapolis Neel Kashkari and Jerome Powell stood together on the resolution to fight inflation regardless of the cost, saying it is the only priority of the FED. In his statement, he said that the United States Economy would get hurt, but business ventures and households would have to endure the impending pain this would cause.
Furthermore, he mentioned that higher interest rates would bring pain, but it is the only way to expel inflation from the economy. And failure to counter now can lead to even much worse pain.
His statement about the economy having to endure inbound hardship and pain sent FUD into the whole market, causing all commodities to trip and fall. The way the market reacted to the oration has people wondering whether the price of Bitcoin can take a leg-up. Some analysts believe that The Fed Chair’s words could easily control the interest of consumers and businesses.
What To Expect From Price
Lark Davis calculated the amount of money obliterated from the crypto and the stock markets after the Wyoming speech to be around $1 trillion.
Notwithstanding, the CEO of Eight Global, Michael Van De Poppe, thinks the market will recover, saying the FED will eventually have to reconsider its hawkish move towards curbing inflation.
