Highlights From Jerome Powell’s Speech And Impact On Bitcoin

The US stock market and Bitcoin price reached record highs on Thursday following the Federal Reserve meeting and it’s decision to cut interest rates and Fed Chair Jerome Powell’s reassuring speech, where he dismissed concerns about his potential resignation following Donald Trump’s election.

Bitcoin (BTC) surged, reaching a new high of $76,990 before slightly retreating, still up 1.2% over the past 24 hours. Meanwhile, US stock indexes also peaked, with the S&P 500 and Nasdaq gaining 0.8% and 1.5%, respectively. Market expectations for the Fed to hold rates steady at the December meeting dropped to 28% from 33%, according to the CME FedWatch Tool.

Rate Cuts on Federal Reserve Meeting, Bitcoin Hits All-Time High

The Fed cut interest rates by 0.25% to 4.5%-4.75%, slower than the 0.5% cut in September at the last Federal Reserve Meeting. However, even with that cut, Fed Chairman Jerome Powell in his speech noted the monetary policy remained “restrictive” and emphasized that it was “recalibration,” not a pivot.

Powell recognized solid economic expansion- a 2.8% GDP gain in Q2 and strong consumer confidence- but dismissed weak October employment data as the transient impact of strikes and hurricanes.

He left the door open for additional easing. However, he did not promise a December rate cut as many economists had been expecting, which effectively ended speculation that he would promise such a policy. Pressed on whether he would ever consider resigning under President Trump, Powell responded, “No,” recognizing legal protections in place.

Following his comments after the Federal Reserve meeting, market probabilities of a December rate cut surged to 75%. US Treasury yields declined, with the 10-year yield ten basis points lower at 4.33%, and the U.S. dollar was 0.7% weaker. Gold rose, climbing 1.8%, and Bitcoin jumped by 1%, reaching an all-time high of $76,990.

Many analysts had initially remained bullish on BTC, having a more defined crypto regulation under Trump’s regime. Bitcoin now changes 1.2% to $74,831 after reaching an all-time high of $76,990 and some even think it could reach $100K. It is perpetuating market optimism with murmurings of making Bitcoin a US strategic reserve-something supported by Wyoming Senator Cynthia Lummis and Potentially setting up the case for a rally. As for now, the speech didn’t impact other big altcoins suck as Dogecoin or XRP.

Bitcoin’s Hedge Narrative Challenged by Rate Hikes

Bitcoin has long been sold as a hedge for such economic ills as inflation, currency devaluation, and low interest rates. The argument sounded credible so long as the prices for the cryptocurrency were rising, apparently immune to the whims of traditional markets. In truth, though, it is susceptible to the same sentiment as retail stocks.

Higher interest rates discourage investors from riskier assets, including Bitcoin. Rate cuts are generally viewed as a positive event for the Bitcoin community.

As the Federal Reserve took to tightening monetary policy from late 2021, Bitcoin tracked lower in tune with other speculative assets; significant setbacks such as the FTX collapse shook trader confidence. Instability in the banking sector revived interest in Bitcoin in 2023 as rate hikes slowed, and then, with Treasury yields peaking in October 2023 and falling, a more straightforward path to lower rates emerged.

It was more clearly apparent in September and November of 2024 that this trend was developing, with renewed optimism pushing Bitcoin prices up once more on signs that at the next Federal Reserve meeting rates will would further ease.

Fed Chair Powell Speech Key Takeaways

During his speech, Fed Chair Jerome Powell in his speech pointed to several key economic factors pushing the job market in the U.S., such as the aftermath of hurricanes and strikes that silenced wage growth. While unemployment fell moderately over the past three months, remaining low, labor market conditions are tighter than before the pandemic, placing downward pressure on inflation from job markets.

Now, inflation is much closer to the Fed’s target, and Powell made clear that he is committed to economic stability. However, he also hinted that the rate cuts would go more slowly if inflation continued high while accelerating job losses, which could accelerate the pace of cuts. While bond yields have risen, they are still way below their level a year ago, and the Fed is looking for signs of stabilization.

The Federal Reserve meeting showed economic data has been running stronger lately than expected, including a recent inflation report and a jobs report that came in weaker than expected, showing areas of caution. The policy remains restrictive, with Powell feeling it has begun to cool the labor market. Approaching a neutral level of rates, the Fed is considering slowing the rate of cuts, although Powell did affirm he would not resign if asked.

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Teuta Franjkovic

Teuta is a seasoned writer and editor with over 15 years of experience in macroeconomics, technology, and the cryptocurrency and blockchain industries.

Starting her career in 2005 as a lifestyle writer for Cosmopolitan, she expanded into covering business and economy for several esteemed publications like Forbes and Bloomberg.

Influenced by figures like Don and Alex Tapscott and Laura Shin, Teuta embraced the blockchain revolution, believing crypto to be one of humanity’s most crucial inventions.

Her fintech involvement began in 2014, focusing on crypto, blockchain, NFTs, and Web3. Known for her excellent teamwork and communication skills, Teuta holds a double MA in Political Science and Law.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.