Powell’s Speech Shakes the Markets, What Impact on Bitcoin?
On December 18, 2024, the Chairman of the U.S. Federal Reserve (Fed), Jerome Powell, announced a 0.25% rate cut, bringing interest rates to a range of 4.25% to 4.5%.
Reuters
This decision, though widely anticipated, sparked mixed reactions across financial markets and within the cryptocurrency investor community.
A Expected Decision, but Cautious Outlook
During his press conference, Powell emphasized that despite the reduction, inflation remains above the 2% target set by the Fed.
Associated Press
He also mentioned that the central bank is planning only two more rate cuts of 0.25% in 2025, reflecting a more cautious approach to persistently high inflation.
Reuters
Financial Market Reactions
The markets reacted mixedly to this announcement. Stock indices experienced fluctuations, reflecting investor uncertainty about the future direction of monetary policy. The Fed’s projections, which forecast inflation reaching the 2% target only by 2027, further reinforced this cautious approach.
Reuters
Impact on the Cryptocurrency Market
In the cryptocurrency sector, reactions were similarly nuanced. The rate cut could theoretically benefit alternative assets like Bitcoin, due to the low yield environment on traditional investments. However, Powell’s statements about the Fed’s lack of intention to hold assets like Bitcoin tempered this enthusiasm.
Reuters
Outlook for Cryptocurrency Investors
For cryptocurrency investors, this situation underscores the importance of staying vigilant and well-informed. Traditional monetary policies continue to indirectly influence the digital asset market. It is crucial to monitor economic developments and statements from major financial institutions to anticipate market trends.
Jerome Powell’s speech on December 18, 2024, illustrates the complexity of the current economic situation, marked by persistent inflation and uncertain growth prospects. For those in the cryptocurrency sector, this announcement serves as a reminder of the need for continuous analysis of monetary policies and their potential impact on digital asset markets.
