Fed Chair Powell Issues ‘Critical’ Warning, Sparking Sudden $60,000 Bitcoin Price And Crypto Crash
Bitcoin has suddenly crashed back toward $60,000 per bitcoin after one billionaire bitcoin buyer revealed they’ve flipped on bitcoin.
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The bitcoin price has struggled over the last month, dropping almost 15%, as fears of a “true correction” swirl.
Now, after one of the biggest bitcoin bulls has said the cryptocurrency could eventually replace the U.S. dollar, Federal Reserve chair Jerome Powell has warned of a “critical period” for the Fed, calling deficit levels “unsustainable.”
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U.S. Federal Reserve chair Jerome Powell has warned the Fed is facing a “critical” period that could … [+]
“The level of debt we have is completely sustainable but the path we are on is unsustainable,” Powell said during the European Central Bank’s Portugal conference, it was reported by the Financial Times, adding the Biden administration was taking excessive risks by “running a very large deficit at a time when we are at full employment” and said “you can’t run these levels in good economic times for very long.”
Bitcoin, crypto and stock market traders have been closely watching the Fed for signs it will begin cutting interest rates in recent months, with analysts forced to dial back expectations of around seven cuts in 2024 to just one or two.
“Getting the balance on monetary policy right during this critical period, that’s really what I think about in the wee hours,” Powell said in response to a question about his top worries, the AP reported.
Last month, the Federal Reserve left interest rates unchanged and signaled it would make just one cut in 2024, with more to come in 2025. The Fed has come under pressure to cut interest rates after hiking them at a record-setting clip in the aftermath of huge Covid-era stimulus spending and money printing that sent inflation spiraling out of control.
“Powell said the U.S. was back on a ‘disinflationary path’ but added that more data was required before the Fed would consider cutting rates,” Russ Mould, investment director at AJ Bell, said in emailed comments. “The latter phrase sounds a bit like a broken record as far as the market is concerned, so the most important part of Powell’s speech was the reference to disinflation, as investors interpreted it to mean there is a stronger case for cutting rates soon.”
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The bitcoin price has dropped back from its recent peak of over $70,000 per bitcoin.
The higher-for-longer interest rate environment has triggered a warning from analysts at the world’s largest asset manager BlackRock, who said an “unprecedented” scenario is unfolding that could hit the bitcoin price and crypto market.
“We see central banks forced to keep interest rates higher than pre-pandemic to tackle persistent inflationary pressures,” the analysts at BlackRock, which has helped to engineer a bitcoin price boom this year by leading a spot bitcoin exchange-traded fund (ETF) revolution on Wall Street, wrote in a report.
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