After a very severe crypto market plunge resulting in bitcoin sliding to $33k from $69k in only a matter of 12 weeks, and a fall across traditional stock markets, all eyes were on Jerome Powell as he made his announcement after the FOMC meeting.
The crypto market had bounced nicely after bitcoin seemingly found a possible bottom at $33,000. Technical indicators were signalling the potential bottom and bitcoin, perhaps having found it, rose 16.7% over the last four days.
Good reverses from potential bottoms were also prevalent across the rest of the cryptocurrency sector, with ethereum up 23%, solana up 26%, and avax up 37%, among the larger cap cryptos.
For this to not be a dead cat bounce, and for the crypto market to be able to attempt to disrupt and turn the downward trend around, good news needed to be heard from Fed chairman Powell.
As it turned out, what Powell said was pretty much in line with what was expected. He talked about reserving the right to change Fed policy as it was needed, in response to evolving market conditions, but the first interest rate looked to still be on for March, although Powell would not be drawn on the size and frequency of rate hikes.
He mentioned how wages were climbing across the jobs markets, and how supply bottlenecks were adding to the uncertainty, but he felt that this was now easing. He mentioned the massive Fed balance sheet but looked uncomfortable when he explained that his board would not address the unwinding of this, at least until rate hikes had started.
As Powell answered questions from the hand-picked audience, the DXY Dollar Index spiked, which signals a stronger dollar and conversely should result in blunting the price rises seen across stock markets and, perhaps causing more downside, at least in the short term for crypto.
Currently, bitcoin is down over the last hour. It has lost around 3% since the commencement of the speech. Most of the crypto market is still in the green, but the next few hours and the daily close will perhaps tell a different story of where crypto is going next.
Powell didn’t really say anything new, so in theory what happens now should be already baked in. It might be said that Powell avoided giving any clear information, and he appeared to be reserving the right to completely negate any future promises. In short, it looked as though the Fed would be reactionary rather than stick to a clear plan.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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