Discover the latest ideas from Jerome Powell’s congressional testimony and its impact on both traditional and cryptocurrency markets. Stay ahead with expert analytics and forecasts.
In his recent testimony, Federal Reserve Chairman Jerome Powell shared his insights into the current economic landscape, highlighting the “modest progress” in fighting inflation. While these comments were bullish for the stock market, resulting in notable gains, the cryptocurrency market did not follow suit. Constant selling pressure has kept major cryptocurrencies such as Bitcoin in a narrow trading range.
Investors in traditional markets greeted Powell’s optimistic tone positively. While Powell indicated that the Fed will wait for sustained positive trends before changing current interest rate policy, confidence in the stock market has increased. This bullish sentiment was reflected in the rising indices, with market participants interpreting the data as a sign of stability and potential future growth.
Unlike traditional markets, the cryptocurrency market has shown resilience in the face of the Federal Reserve chairman’s certification. Despite Powell’s optimistic economic forecasts, Bitcoin and other major cryptocurrencies have faced sustained selling pressure. After seeing a big sell-off, Bitcoin remained stuck between $57,500 and $59,000, unable to get out of this narrow trading range.
In his testimony, Powell stressed the importance of continued positive economic data to boost the Fed’s confidence in achieving the 2% inflation target. He stressed the role of restrictive monetary policies in balancing supply and demand, which in turn imposes downward pressure on inflation. According to FedWatch on the Chicago Mercantile Exchange (CME)), there is a 70% probability of a rate cut in September, reflecting market expectations of continued accommodative monetary policy.
The impact of low inflation on cryptocurrencies and US interest rates
Data from the Bureau of Labor Statistics (BLS) showed that the main consumer price index (CPI) fell from 0.0% to -0.1% in June, which is below the median estimate of 0.1%.
The headline CPI fell from 3.3% to 3.0%, also below the median estimate of 3.1%. Meanwhile, the core CPI fell from 0.2% to 0.1% and from 3.4% to 3.3%.
These figures suggest that inflation is moving in the right direction, which could affect the Fed’s next actions. In a statement this week, Jerome Powell indicated that the bank would consider cutting interest rates if inflation continued to fall.
Most economists expect the Fed to cut interest rates for the first time at its September meeting. In addition, high-frequency data shows that manufacturing and non-manufacturing PMIs fell below 50 in June.
Another report from the Bureau of Labor Statistics (BLS) showed that the unemployment rate rose to 4.1% while wage growth slowed.
Impact on Bitcoin, Mantra and Not coin
Cryptocurrencies tend to perform well when the Fed shifts to a dovish stance, as we saw earlier this year when bitcoin rose to a record high while the Fed signaled possible rate cuts.
Interest rate cuts are likely to push investors to move from safe money market funds to riskier assets such as Bitcoin, Mantra, and Not coin. Other altcoins such as Ondo Finance, Near Protocol, and Pepe can also continue. in height.
These coins could join other assets such as stocks in their strong rally, with the Nasdaq 100,S&P 500 and Dow Jones all jumping to record highs.
The cryptocurrency industry faces other risks that may affect prices. For example, the available supply of bitcoin is increasing as the German government continues to dispose of its holdings. Miners’ surrender continues, while Mt.Gox’s distributions continue.
Bitcoin ETFs Achieve New Record Flows
Uncertain market conditions failed to deter institutional investors, with Bitcoin ETFs in the US recording another day of positive net inflows.
Interestingly, there is stiff competition among BTC ETFs as small issuers like Franklin Templeton start to climb the rankings.
Bitcoin ETFs in the US are experiencing a winning streak as they mark their fourth day of consecutive flows exceeding $100 million as institutions continue to bet heavily on Bitcoin.
BTC exchange-traded funds recorded a total of $147.4 million in net inflows on July 10. Fidelity Wise Origin Bitcoin Fund (FBTC) led the campaign with $57.8 million, followed by $31.7 million from Franklin Bitcoin ETF (EZBC), its biggest gain since the beginning of May.
The BlackRock iShares Bitcoin Trust (IBIT) saw a significant drop in inflows, recording inflows of $22.2 million. Although this sounds small, IBIT attracted a total of $308.2 million on July 9 and 10.
Coin Shares Valkyrie Bitcoin Fund (BRRR) also enjoyed strong gains, adding $20.7 million to its balance sheets. As for the Grayscale Bitcoin Trust (GBTC), it seems to be struggling to stay competitive, recording another day of outflows – albeit a small amount of $8.1 million.
As pointed out by the ETF store boss, one of the most surprising results is the tremendous success of IBIT, and how it was able to attract more capital in one day (July 9) compared to the majority of other ETF products launched. This year.
