Bitcoin targets $58,000 after Fed Chairman’s comments on US inflation – DiarioBitcoin
By Hannah Perez
Bitcoin jumped in price after US central bank Jerome Powell’s statement signaled an imminent interest rate cut.
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- Fed Chairman Jerome Powell on US economic situation
- He acknowledged the progress and expressed confidence that inflation is on track to reach the 2% annual target.
- The speech slightly raised expectations of an upcoming interest rate cut.
- Bitcoin price jumped above USD $57,500, gaining 3% on the day
Bitcoin (BTC) posted a modest bullish move amid a prolonged correction after the US Federal Reserve Chairman spoke out regarding the economic outlook in the country.
US central bank chief Jerome Powell addressed some economic concerns during a congressional hearing on Tuesday, saying Fed officials still want to see more progress before cutting interest rates.
“The Fed has stated that we do not expect it to be appropriate to lower the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2%.“, he stressed.
The US inflation rate has cooled since hitting a nearly four-decade peak two years ago. Inflation hit record highs in 2021 and 2022 in the wake of the pandemic, with the year-over-year reading settling in at 7.0% at the end of 2021 and 6.5% at the end of 2022. At the end of 2023, it was 3.4%. In June 2024, the rate was 3.3%.
Powell acknowledged that the most recent readings “have shown modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably towards 2%However, he said that high inflation is not the only risk facing the national economy.
Fed officials have been closely watching interest rates, —specifically the consumer price indices (CPI)—for a decision on an imminent interest rate cut. The central bank began raising rates at an accelerated pace in March 2022, in an attempt to curb runaway inflation. While increases have paused since last year, a first cut has yet to be announced, a move expected to provide relief to markets. —including cryptocurrencies.
The decision to cut the benchmark rates also takes into account the labour market. The unemployment rate rose to 4.1% in June from 4.0% in May and forecasts for 4.0%. This marked the highest level for that reading since November 2021. Meanwhile, wage growth was the slowest for four years.
“Easing policy restrictions too late or too little could unduly weaken economic activity and employment“Powell added during his prepared statement. In later comments, he added that the latest data show “considerable cooling” in the labor market and that the FED is “very aware” of downside risks, as quoted CoinDesk.
Bitcoin jumps after Powell’s words
The speech appeared to offer hope for an upcoming interest rate cut as prices rose slightly.
In accordance with CNBCEarlier this year, markets were expecting at least six Fed rate cuts of a quarter percentage point each. While members of the rate-setting Federal Open Market Committee mentioned just one at their June meeting, investors appear to be anticipating two reductions this year, one in September and one in late 2024.
The cryptocurrency market reacted positively, with Bitcoin momentarily rebounding above $57,800 and marking a 3% daily increase. The world’s largest cryptocurrency started the week below $55,000, dragging a loss of close to 20% on the month. It is trading around $75,600 at the time of publication.
Most major cryptocurrencies rose in line with Bitcoin following Powell’s comments, with many of them posting single-digit percentage increases over the past 24 hours. The global digital asset market capitalization rose 3.4% to $2.12 trillion, according to data from CoinMarketCap.
Article by Hannah Estefanía Pérez / Bitcoin Diary
Image by Nicole Leon (https://nicoleleon.design)
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