Federal Reserve takes aggressive stand on inflation, crypto hit by bloodbath
- Bitcoin, Ethereum, Cardano and other altcoins in the top 20 are hit by a bloodbath following Powell’s statements on inflation.
- The Federal Reserve Chair argues that restoring price stability through higher interest rates could increase pain for households and businesses.
- Analysts note that crypto buyers stepped in before Powell’s speech, however, there is a spike in uncertainty as Bitcoin, Ethereum prices decline.
In his speech at the Jackson Hole Economic Symposium, Jerome Powell announced that the Federal Reserve’s focus is to bring inflation back down to 2%. Price stability is key, and the burden of heavy inflation is likely to fall on households and businesses. In response to Powell’s speech, the crypto market was hit by a bloodbath.
Also read: Bulls take Shiba Inu, Dogecoin price higher as financial leaders eye Jackson Hole
Federal Reserve’s stand on inflation triggers crypto bloodbath
Jerome Powell, the Chairman of the US Federal Reserve, revealed the key focus of the central banking system is to bring inflation down to the 2% goal. Since the overarching focus is on inflation, the Federal Reserve warned households and businesses of pain. In response to Powell’s comments, traders pulled capital out of crypto markets.
Forty two billion dollars were wiped out of crypto market capitalization overnight as market participants prepare to shoulder the heavy burden of inflation. Restoring price stability is a challenge and the Federal Reserve is ready to use the central bank’s tools forcefully to bring demand and supply into a better balance.
Jerome Powell was quoted as saying,
The US economy is clearly slowing from the historically high growth rates of 2021, which reflected the reopening of the economy following the pandemic recession. While the latest economic data have been mixed, in my view, our economy continues to show strong underlying momentum.
Crypto proponents were concerned about Powell’s speech and his commentary on interest rates. US stocks continued their struggle with all four major indices in the red. Bitcoin and Ethereum’s correlation with Nasdaq and S&P 500 remained unchanged, therefore, crypto prices took a downturn.
Bitcoin is testing the 2015 trend line in a bearish move
Justin Bennett, crypto analyst and trader, evaluated the Bitcoin price trend and revealed a bearish outlook. Bennett believes that Bitcoin price is likely to plummet from the $20,680 level as the asset tests its 2015 trend line.
BTC/USD price chart
BigCheds, a pseudonymous crypto analyst, identified a bearish divergence in the Bitcoin price chart. The analyst is bearish on Bitcoin and predicted a decline in the asset, on similar lines as Justin Bennett.
BTC-USD price chart
Analysts at FXStreet hold a contrasting opinion. Analysts believe Bitcoin price could trigger a recovery rally signal soon. For more details like price information and targets for Bitcoin price, check the video below.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
