Bitcoin’s Decline Amid Concerns Over Federal Reserve’s Rate Cuts
Federal Reserve Chair Jerome Powell’s cautious remarks on tariffs and inflation have negatively impacted Bitcoin, leading to a 1.5% price decline. Powell highlighted uncertainties regarding the economic effects of tariffs amid a shifting trade landscape, which may challenge the Fed’s monetary policy. Market expectations for rate cuts have adjusted following his address, indicating investor concerns about the Fed’s responsiveness. Powell also discussed the regulatory context for cryptocurrencies, hinting at potential growth in stablecoins.
Federal Reserve Chair Jerome Powell conveyed a cautious stance regarding U.S. tariffs and potential inflation impacts during a recent address at the Economic Club of Chicago. He stated that the extent of announced tariffs is unexpectedly high and warned of possible economic tensions arising from the Fed’s dual mandate objectives. Powell remarked on the uncertainty regarding how these tariffs may influence monetary policy going forward.
Following Powell’s remarks, Bitcoin experienced a decline of 1.5%, bringing its price to approximately $83,700 within a short period. The cryptocurrency’s value dropped further to $83,800, representing a decrease of 0.5% over the previous 24 hours. Concurrently, the S&P 500 index saw temporary losses, decreasing 2% midday before recovering some losses.
Bitwise Senior Investment Analyst Juan Leon noted that Powell’s frequent use of the phrase “it’s too soon to say” might foreshadow the potential for a more severe situation evolving as a result of sluggish Fed responses. This sentiment indicates market concerns that the Federal Reserve may not be keeping pace with economic realities, suggesting that a reactive approach may lead to unfavorable outcomes.
While Powell acknowledged forecasts hinting at an economic slowdown, he maintained a positive growth outlook. He indicated that Trump’s tariffs are likely to cause at least temporary inflation spikes, although consistent effects remain uncertain. Although Trump recently reduced tariffs to 10%, allowing for improved recession odds, the focus on tariffs and trade with China raises questions about future Fed policy adjustments.
Fed policymakers previously anticipated two rate cuts this year, but market expectations, influenced by Powell’s address, suggest traders expect four cuts by 2025. Regarding regulatory perspectives on cryptocurrencies, Powell acknowledged the mainstreaming of this sector and expressed that stablecoins might offer significant appeal while emphasizing consumer protection in such products.
Amid turbulent trade relations, Bitcoin is perceived as a risk asset rather than a safe haven. Messari analyst Dylan Bane proposed that the ongoing tariff conflict could redefine this perception as it weakens the U.S. dollar’s status as the world’s reserve currency through diminished global trade and international collaboration.
This article discusses the impact of Federal Reserve Chair Jerome Powell’s remarks on inflation and tariffs on Bitcoin’s market performance and the broader financial landscape. Powell’s cautious tone reflects the uncertainty surrounding U.S. tariffs and the potential implications for economic policy, while market reactions suggest investor apprehension about the Fed’s ability to respond effectively. Additionally, the evolving regulatory environment for cryptocurrencies was touched upon, indicating a significant intersection between monetary policy and digital assets.
Original Source: decrypt.co
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