Jerome Powell, the Federal Reserve Chairs’ Jackson Hole speech led to plunging of Bitcoin (BTC) and Ethereum (ETH) prices. The BTC price decreased by 1.83 percent, whereas the price of ETH decreased by 1.80 percent one hour into Powells’ speech.
Powell began his speech by highlighting the need to bring inflation back to the goal of two percent. He emphasised the importance of price stability in the economy and the role of Fed in it. According to him, high interest rates, slow growth, and soft labour marker conditions might bring down the inflation rates.
According to the inflation data released earlier this month, the crypto market experienced a short rally, which came as a relief for the crypto traders after a tough time due to high market volatility. This fall after the speech can be related to macroeconomic factors unfavourable to the crypto industry.
Powell in the Jackson Hole speech said “Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth.”
Slow-paced U.S. Economy
Powell pointed out the slow-down of the U.S. economy after its historic growth rates in 2021. The growth in 2021 indicated the restart of economy after the recession faced by it during the pandemic.
He said that even though the economic data might not reflect it, the economy has a strong underlying momentum. “The labor market is particularly strong, but it is clearly out of balance, with demand for workers substantially exceeding the supply of available workers.”
Whereas the price drop of BTC and ETH after the Fed Chairs’ speech also affects the price change of other cryptocurrencies. Currently, BTC is down by 1.94 percent and ETH is down by 4.16 percent, in the last two hours.
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Source: https://coinpedia.org/news/heres-how-crypto-market-reacted-to-jerome-powell-speech/