The recent remarks by Federal Reserve Chair Jerome Powell at Sintra have caused a 2.7% drop in Bitcoin prices. Powell emphasized the need for confidence before implementing interest rate cuts, citing a low unemployment rate and concerns about inflation. This cautious approach has led to increased volatility in the crypto markets.
Ben Kurland, CEO of DYOR, notes that while disinflation is generally seen as positive, the Fed’s reluctance to lower interest rates signals ongoing economic uncertainty. This uncertainty is expected to continue affecting the cryptocurrency markets in the near future.
The Fed’s projection that 2% inflation will not be achieved in the coming years, along with a significant budget deficit, raises concerns about long-term economic stability. The 4% unemployment rate, while resilient, suggests that the Fed may keep interest rates high for an extended period, potentially impacting riskier assets like cryptocurrencies.
In light of Powell’s cautious stance, immediate rate cuts are unlikely, leading to sideways or downward trends in the crypto markets until the Fed reassesses the situation.