Fed Chair Jerome Powell says recession is possible but unlikely; Bitcoin price holds up above $30,000

• Federal Reserve Chair Jerome Powell hints at more restrictive policy at the 2023 ECB Forum on Central Banking, diminishing risks of US recession.
• Powell stated that consecutive rate hikes should not be ruled out after pausing earlier this month.
• Bitcoin price has been lingering above $30,000 for nearly a week now, unfazed by Powell’s comments.

Bitcoin price has been keeping investors happy, sitting above the key support level of $30,000. This is expected to change as we move into July as Federal Reserve Chair Jerome Powell has been hinting at rate hikes. The hawkish rhetoric was reiterated on Wednesday when Powell also discussed the possibility of a recession this year.

Powell says Fed focused on inflation

On Wednesday, Federal Reserve Chair Jerome Powell spoke at the 2023 ECB Forum on Central Banking along with Christine Lagarde, the President of the European Central Bank (ECB). During his speech, Powell did not give out any specific details about the plans of the central bank going forward. However, he did address the concerns surrounding a recession.

Fed's chair noted that while the United States is vulnerable to a recession this year, the chances are slim. He went on to discuss the potential of rate hikes stating that the market may or may not see a repeat of the June policy meeting, where the policy rate was left unchanged at 5% to 5.25%. 

However, Powell said that he would not rule out the possibility of consecutive rate hikes. This was a confirmation of his previous statement of two more rate hikes taking place this year. He added,

“Although policy is restrictive it may not be restrictive enough and it has not been restrictive for long enough.

While initial reactions of both the stock market and the US Dollar Index were positive, over the last few minutes, the indices have declined to minimal positive change.

At the ECB Forum, ECB President Lagarde also provided information on the digital Euro, saying that a decision on this can be expected by October. Lagarde’s statement came after the European Commission (EC) posted its legislative plans for a digital Euro earlier today.

In a post put out by EC’s Executive Vice President Valdis Dombrovskis, the digital Euro would be available to everyone, everywhere, for free. The post further noted,

“A digital euro would also enhance the integrity and safety of the European payment system at a time when growing geopolitical tensions make us more vulnerable to attacks to our critical infrastructure.

Bitcoin price remains unfazed

Bitcoin price declined by a little over 1% following Fed Chair Powell’s remarks today. The cryptocurrency has been moving sideways for more than a week now after breaching above the $30,000 mark on June 21. At the time of writing, BTC is trading at $30,300, keeping above the key support level.

BTC/USD 1-day chart

Even though BTC has marked its 2023 highs this week, a push to $31,000 would cement the potential of recovery for the cryptocurrency. Flipping this price level into a support floor could pave the way toward $34,000.