The price of bitcoin has fallen sharply towards $20,000 per bitcoin, down more than 10% in the past week, along with Ethereum and the other top ten cryptocurrencies BNB
Now, with the bitcoin and crypto market poised to crash below $1 trillion, traders are gearing up for a much-anticipated speech from Federal Reserve Chairman Jerome Powell at the conference. from the central bank in Jackson Hole, Wyoming next week.
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“Powell will want to err on the hawkish side,” said Tim Magnusson, chief investment officer at hedge fund Garda Capital Partners. Bloomberg, adding that restoring price stability is the top priority. “The flattener will be in play until the Fed stops tightening.”
Powell is scheduled to speak Friday, August 26 at 10 a.m. ET and is expected to speak on the economic outlook.
The Federal Reserve launched a program of interest rate hikes and stimulus cuts late last year in a bid to curb soaring inflation that has hit a 40-year high. The monetary policy tightening sent stock markets crashing and wiped about $2 trillion from the scorching crypto market that had peaked at $3 trillion in 2021.
Officials expressed somewhat conflicting views on the Fed’s way forward this week, with St. Louis Fed President Jim Bullard calling for another 75 basis point rate hike during the Fed’s September meeting and Esther George of Kansas City adopting a more dovish tone.
“I don’t really see why you want to extend interest rate hikes into next year,” Bullard said. Told the the wall street journaladding that he thinks the Fed “should continue to move quickly toward a key rate level that will put significant downward pressure on inflation.”
George, who is hosting the Fed’s policy retreat from Jackson Hole next week, said Thursday that policymakers should be mindful of how past decisions affect the economy.
“We’ve done a lot, and I think we have to be very aware that our policy decisions often operate with a lag,” George said in comments reported by Bloomberg.
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Market watchers are paying close attention to comments from Fed policymakers who fear the US central bank could trigger a recession if it goes too hard and too fast in its war on inflation.
“Recession fears are mounting, not least because the US Federal Reserve seems obsessed with raising interest rates again, which, while aimed at controlling inflation, raises new questions about the economy’s ability to to recover,” Sophie Lund-Yates, an analyst at brokerage Hargreaves Lansdown, wrote in emailed comments.
This week, the latest Fed meeting minutes showed officials saw “little evidence” that inflationary pressures were easing. However, participants in the Federal Open Market Committee (FOMC) fear that prolonged interest rate hikes will hurt the economy.
“Investors are trying to figure out which way to go amid a slew of conflicting data,” said Danni Hewson, analyst at investment platform AJ Bell.
“While the Fed’s final minutes were delivered in a much more dovish tone than lately used, it also appears that central bankers are determined to keep an iron grip on inflation even as they hedge the hand of a velvet glove Comments that it could dampen the pace of rate hikes “at some point” has left investors in a dilemma, and the latest jobs numbers will have only exacerbated that”.