Bitcoin Drops to $100,000 Following Hawkish FOMC Commentary Despite Rate Cuts
Bitcoin dropped to $100,300 after hawkish comments from Fed Chair Jerome Powell, despite a 25 basis point interest rate cut. The broader cryptocurrency market followed, with Ethereum and other coins declining. The stock market also reacted negatively, with Powell emphasizing caution in future rate cuts influenced by inflation. He clarified the Fed’s prohibition on owning Bitcoin, indicating this requires congressional action.
Bitcoin (BTC) experienced a decline, falling to a low of $100,300 following hawkish remarks made by Federal Reserve Chair Jerome Powell during the Federal Open Market Committee (FOMC) meeting. Despite a scheduled 25 basis point interest rate cut, the cryptocurrency market faced significant corrections, with Bitcoin trading at $100,740, representing a 5.7% decrease over the previous 24 hours according to CryptoSlate data. The broader crypto market reflected similar downturns; Ethereum (ETH) dropped 6.8% to $3,697, with BNB and Solana (SOL) declining by 4.6% and 8.1% respectively. Among the top ten cryptocurrencies, Dogecoin (DOGE) exhibited the steepest loss, experiencing an 11% fall to reach $0.348.
The United States stock market mirrored these losses, as the S&P 500 concluded with a 1.55% decline, while the Nasdaq 100 decreased by 2%. Stocks of cryptocurrency-related companies were also adversely affected; Coinbase’s COIN stock closed down 6.6%, and MicroStrategy’s MSTR saw a reduction of 5.7%. Powell’s comments suggested a more cautious approach regarding future interest rate adjustments, reflecting elevated inflation expectations and uncertainties ahead in the economic landscape. He indicated that prospective rate cuts in 2025 would largely depend on forthcoming market data.
Furthermore, futures markets anticipate only two potential rate cuts next year, with expectations adjusted from 49 basis points to 37 basis points by 2025. Prediction markets also show a 90% likelihood of no rate cuts occurring in January 2025. However, Powell remained optimistic about the economic outlook, asserting, “It’s in a really good place, our policy is in a really good place (and) I expect another good year next year.” When questioned about the Federal Reserve’s stance toward establishing a Bitcoin Strategic Reserve, he clarified that the Fed is not permitted to own Bitcoin and that such matters require congressional consideration. He stated, “But we are not looking for a law change at the Fed.”
The context surrounding the Federal Reserve’s interest rate decisions is critical for understanding the broader implications on the cryptocurrency market and traditional equities. The FOMC meeting is a significant event that influences market sentiment, particularly following public statements by the Federal Reserve Chair. Jerome Powell’s comments on the economy and interest rates are closely monitored by both investors and market analysts, as they provide insight into the Fed’s monetary policy direction amidst fluctuating inflation rates and economic uncertainty. The impact of interest rate changes extends to cryptocurrencies like Bitcoin, which are often perceived as riskier investments when traditional markets react negatively to fiscal policies. Additionally, discussions surrounding Bitcoin’s status, including its potential for inclusion in government holdings, further highlight the evolving regulatory considerations faced by digital currencies.
In summary, Bitcoin’s decline to $100,300 reflects the sensitive interplay between federal monetary policy and cryptocurrency valuation. Despite a 25 basis point rate cut, market reactions were predominantly negative, affecting major cryptocurrencies and related stocks. Fed Chair Jerome Powell’s comments revealed a cautious approach to future interest rate adjustments, underlining the complexities of market expectations as they pertain to inflation. The Fed’s inability to own Bitcoin, coupled with Powell’s assurance regarding future economic performance, encapsulates ongoing discussions about the role of cryptocurrencies in the financial system.
Original Source: cryptoslate.com
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