After Jerome Powell’s speech at 9 p.m. yesterday, August 26, bitcoin price has fallen by 7.6 percent since the time of the speech. The prices of other altcoins such as Ether (ETH), BNB and SOL also fell 10%.
International financial markets were also not immune to the red, as stock indexes of all 3 US stock exchanges, DJIA, S&P 500 and NASDAQ recorded a deep close of nearly 4%.
The Fed will continue to raise interest rates.
Specifically on the evening of August 26, during his highly anticipated annual policy speech at the Jackson Hole Conference in Wyoming, Fed Chairman Jerome Powell asserted that the Fed will use financial instruments 1 more aggressively to control inflation that is still near its highest level in more than 40 years.
Jerome Powel said the central bank’s main goal is to control and restore inflation at its target level of 2%, compared to the current 8.5% inflation in the US, despite the fact that consumers and businesses will bear the “pain” of the economy.
BTC price fluctuated extremely strong before and after the speech, bouncing sharply to the $21,800 mark. However, after the Fed Chairman’s speech, BTC began to decline again, plunging from $21,800 to $20,100, the lowest price since July 15, 2022.
In the past 24 hours alone, $362.9 million has been liquidated, of which more than 92% are long orders with ETH and BTC accounting for the highest proportion.
Powell’s speech this year lasted just 10 minutes, less than a third the length of any year. And in those short 10 minutes, investors could see a tough policy stance from the Fed chairman.
In fact, on August 25, the US stock market had a session of up to 1.5%. However, after the speech, an average decline of 3.5% on all three floors showed the pessimistic sentiment of investors in the outlook of the economy.
Why did the market react violently after Jerome Powell’s speech?
US GDP growth has been negative for 2 months – which means a technical” recession. The term “technical” here can be understood that, in terms of indicators, the US has entered a recession, but this may just be a noise signal and the US GDP may reverse in the last months of the year.
Raising interest rates can curb inflation, but it reduces people’s spending needs and businesses’ ability to borrow capital to expand production.
The Fed’s aggressive rate hike shows that hopes for a U.S. economic reversal have been completely extinguished.
Both the stock and crypto markets rallied ahead of the speech, suggesting that investors were desperately expecting a more dovish move from Powell’s speech, and when expectations were not met, the market hit new lows.
What will be the price of bitcoin and altcoin?
The U.S. has entered a recession, and Powell’s all-year shorter speech doesn’t seem to negate this.
After the deep decline, the cryptocurrency market price is sure to move sideways for days to come.
However, it should be noted that in the next period, the Fed will have 3 more rate hikes in the sessions of 21/09, 02/11 and 14/12, Bitcoin is likely to face even more difficulties in the future.