Bitcoin fell about 5% to $20,822 after Federal Reserve Chairman Jerome Powell spoke in Jackson Hole, Wyoming, on Friday, saying the central bank will “use its instruments decisively” and that combating inflation will take time. During the event, Powell spoke briefly about the importance of price stability.
He stated that it is “the foundation of the economy” and that without it, the economy would not benefit anyone. He emphasized that pricing stability must be restored and maintained but that “households and businesses will experience some pain” until the economy reaches that point.
Powell said “These are the undesirable costs associated with controlling inflation. However, failure to restore price stability would result in much more suffering.”
The Bitcoin Price Reacts Immediately to Powell’s Speech
A massive market liquidation has hammered Bitcoin’s price this year. The asset has dropped 70% from its all-time high of $69,045 in November of last year. According to Coingecko data, Bitcoin is currently trading at $20,229, down 3.4% in the last seven days.
Following Powell’s remarks, the rest of the cryptocurrency market was red. The price of bitcoin plummeted immediately following Powell’s speech, while the S&P 500 index fell more than 2% in tandem with the cryptocurrency market. Ether, the second-largest cryptocurrency, fell nearly 5%, from $1,687 on Friday morning to $1,595. Cardano, Polkadot, and Solana have all dropped 4% in the last 24 hours.
Inflation in the United States is at a four-decade high.
The Fed has been raising interest rates this year to reduce inflation, which is at a 40-year high in the United States. As a result, the dollar has strengthened, while other markets, such as US stocks, have suffered as investors flee risk assets due to economic pessimism. Powell stated that the Federal Open Market Committee’s decision to raise interest rates by 50 or 75 basis points at its meeting next month will be heavily influenced by the “totality of the incoming figures and the evolving projections.”
After a brief bull run, the Bitcoin price has recently reached $24,000. Nonetheless, as the market closes for the weekend, the price of Bitcoin is falling. Meanwhile, Bitwise CIO Matt Hougan stated that market participants will continue to monitor the Fed’s comments and that Powell’s Jackson Hole address could set the tone for monetary policy for the rest of 2022.