Federal Reserve Chair’s Remarks Shake Market Expectations

Federal Reserve Chairman Jerome Powell highlighted uncertainty regarding December’s rate policy in a press conference, impacting market expectations and causing shifts in financial and crypto markets.

Powell’s comments reduced the probability of a rate cut, triggering declines in risk assets and rises in U.S. Treasury yields and the dollar index.

Fed’s December Decision Uncertainty Alters Market Landscape

Jerome Powell’s comments at the press conference emphasized the uncertainty surrounding additional rate cuts in December. He stated, “There are very different views within the committee on how to act in December,” pointing to potential divisions within the Federal Reserve on future policies.

The immediate impact of Powell’s announcement was a sharp decline in the market’s pricing probability for another rate cut. These changes prompted a decline in risk assets, as U.S. Treasury yields and the DXY dollar index experienced increases.

Key market reactions following Powell’s remarks showed declines in prices for risk assets like cryptocurrencies and stocks. Bitcoin and other correlated digital currencies dipped amid anticipated lower macro liquidity. Meanwhile, increases in U.S. Treasury yields signaled investor shifts towards safer options.

Volatility in Crypto Markets Amid Powell’s Rate Remarks

Did you know? The rapid decline in market expectations from 92% to 70% for a December rate cut mirrors similar shifts experienced during the Federal Reserve meetings in 2020. Such fluctuations often contribute to increased volatility in financial markets.

According to CoinMarketCap, Bitcoin (BTC) is currently priced at $110,726.90 and holds a market cap of $2.21 trillion. Trading volume over the past 24 hours reached $61.75 billion, showing a decrease of 4.84%. Over the past 30 days, Bitcoin’s price recorded a 3.23% decline against the backdrop of Powell’s comments.

Coincu research team indicates that macroeconomic uncertainty will likely prompt sustained volatility in cryptocurrency markets. Investors tend to gravitate towards stability amid rising risk premiums. Observing historical rate cycles, similar patterns show that prolonged policy ambiguity often precedes increased market diversification into crypto assets.