Bitcoin and ether lost as much as 1.7% and 1.5% as Federal Reserve Chair Jerome Powell appeared in the Senate, before paring losses.
Risk assets took a hit Tuesday Morning as the central bank head told Senators rate hikes are here to stay.
“We would be prepared to increase the pace of rate hikes,” Powell said during remarks before the Senate Banking Committee. “Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time.”
Equities slid too on Powell’s prepared remarks, with the S&P 500 and Nasdaq Composite indexes losing around 1% each.
The endgame for interest rates could be “higher than anticipated,” Powell noted, citing economic data that continues to show a resilient labor market and persistent inflation.
Crypto’s early dip comes as investors and industry leaders continue to parse through an increasingly hostile regulatory environment, rife with enforcement actions, limited access to fiat on and off ramps and general uncertainty about the future of the industry.
That may make traders cautious.
“Why would anyone buy crypto now, with so much regulatory uncertainty? In part, it’s because of the regulatory uncertainty,” Noelle Acheson, author of Crypto is Macro Now and former head of market insights at Genesis, wrote in a note Tuesday. “A targeted and official campaign against a particular industry is a reminder why a decentralized store of value can be an attractive “insurance” against a government overstepping its mandate.”
Markets will be keeping an eye on Powell’s House testimony tomorrow — the second part of his Semiannual Monetary Policy Report to Congress — as well as upcoming jobs data and an updated unemployment report this week.
The Fed’s next policy setting meeting is slated for March 21-22, but FOMC members will be in a comment blackout period during these key data releases.
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Source: https://blockworks.co/news/crypto-whipsaws-powell-congress