Fed Triggers Bitcoin and Crypto Flash Crash As Jerome Powell Declares Rates Could Rise Higher Than Expected

Comments from US Federal Reserve Chairman Jerome Powell sent global markets and Bitcoin into a free fall on Tuesday. But so far, BTC has bounced back.

In a U.S. Senate Banking, Housing, and Urban Affairs Committee hearing, Powell said recent stats on inflation suggest the Fed may ultimately have to raise interest rates higher than anticipated.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated…

If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

Powell’s comments triggered a Bitcoin flash crash, with the top cryptocurrency dropping from $22,341 to a low of $21,927 in a span of just 15 minutes.

BTC then jumped back above the $22,000 mark and is trading at $23,309 at time of publishing.

Bitcoin’s correlation with stocks has weakened in recent weeks, with BTC outperforming the S&P 500 on its recent run-up to a high of $24,960.

But last week, that correlation appeared to shift in the other direction.

Stocks rose while Bitcoin dropped below $23,000, with the digital asset-friendly bank Silvergate revealing it’s taking steps to assess its ability to stay in business after the collapse of crypto exchange FTX.

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