Market Swings After Fed Chair Jerome Powell's Speech
The cryptocurrency market is experiencing a green wave following remarks from Federal Reserve Chair Jerome Powell.
Market Swings After Fed Chair Jerome Powell's Speech
Early on February 8 (Vietnam time), Federal Reserve Chair Jerome Powell delivered a speech on the U.S. economic outlook and monetary policy at the Washington DC Economic Club.
In his opening remarks, Powell reaffirmed positive signals about U.S. inflation, aligning with last week’s predictions when the Fed announced a 0.25% hike in the benchmark interest rate. This initially boosted market sentiment.
The Fed anticipates a significant reduction in inflation throughout 2023. Powell indicated that achieving the 2% inflation target might extend beyond this year and potentially into the next. He stated:
“The process of reducing inflation has started, initially driven by the goods sector, which makes up a quarter of the economy, and we hope to see similar trends in the housing sector. However, there is still a long way to go; it is too early to draw conclusions.”
Towards the end of the discussion, Powell emphasized that despite progress in reducing inflation, the Fed might need to increase rates more aggressively if the labor market remains strong. This statement briefly rattled investors.
“Indeed, we will react to economic data. If we continue to see, for instance, strong labor market reports or rising inflation, we will have to take further action and continue to raise rates beyond what is currently priced in.”
These remarks followed last week’s press conference when the Fed decided to slow the pace of rate hikes to 0.25 percentage points. Powell had noted that the central bank was making solid progress in bringing down inflation, leading the market to speculate that the Fed might soon adopt a more dovish stance.
Looking ahead to the March meeting, two more CPI reports and one employment report could influence the Fed's decision.
Powell's comments have eased concerns about interest rates. Bitcoin (BTC) surged to $23,320 before quickly dropping back to $23,070 within 15 minutes. The leading cryptocurrency has since rebounded, trading around $23,452.
15m Chart of BTC/USDT on Binance at 08:25 AM on February 8, 2023
Ethereum (ETH) showed a similar reaction, peaking at $1,675 before reversing and briefly turning red. It has since recovered, trading around $1,697.
15m Chart of ETH/USDT on Binance at 08:25 AM on February 8, 2023
Top altcoins have also seen gains of approximately 2-5%, with the overall trend in the cryptocurrency market being upward.
Market Overview for the Morning of February 8, 2023, according to Coin360
