FED Chairman Jerome Powell delivered a speech in Jackson Hole on Friday that sent the price of Bitcoin and other cryptocurrencies down. Indeed, the current period of high inflation and the need to combat it are not factors conducive to the rise in risky assets.
Jerome Powell brings down risky assets and Bitcoin
On the sidelines of the economic symposium in Jackson Hole, in the state of Wyoming in the United States, the chairman of the American Federal Reserve (FED), Jerome Powellheld a pessimistic speech, which influenced the price of Bitcoin (BTC) downwards.
This congress brings together every summer the representatives of various central banks of the world and obviously, inflation was at the heart of the discussions This year. Thus, during his speech Friday at 4 p.m. Paris time, Jerome Powell used words heavy with meaning:
“While higher interest rates, slower growth and looser labor market conditions will reduce inflation, they will also cause hardship for households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain. »
According to him, a return to the annual target of 2% will therefore take time and will require sacrifices. This is what drives the FED to adopt a policy called hawkish which, unlike a dovish policy, sees interest rates rise.
Such a speech by Jerome Powell boded ill for risky assets and, by extension, for Bitcoin. At the time of writing this article, the price of BTC has thus conceded more than 7% in nearly 24 hours, as shown in the hourly chart below:
Bitcoin price
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Towards a longer than expected situation?
Jerome Powell insisted that the restrictive policy will be maintained as long as the inflation curve is not broken. Currently, the interest rate in the United States is 2.5% and this could well increase in the futureeven if this decision has not yet been made:
“Our decision at the September meeting will depend on the totality of incoming data and the evolution of the outlook. At some point, as the monetary policy stance tightens further, it will likely become appropriate to slow the pace of increases. »
On our private Toaster group, the financial analyst Vincent Ganne returned in particular to his daily intervention on energy sector inflation. Electricity prices could indeed play a crucial role in the coming winter. He points out that although the situation is not clearly not engagingnothing is ever done in advance:
“The worst-case scenario is not automatic for fall and winter. It’s so consensual, everyone is predicting the end of the world this winter and you know the market’s ability to be upset. »
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This is the whole difficulty of this period: the data is negative, that’s a fact. This does not necessarily lean in favor of a rise in the price of Bitcoin. But the past could also show nice surprises when you least expect it. These elements therefore require us to have a clear and well-defined plan so as not to let the market undermine our daily morale.
👉 Also in the news – StakinSat’s Bitcoin (BTC) savings now available from Ledger Live
Source: FED, TradingView
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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