While financial markets were in turmoil last week with the Fed cutting rates, it looks like it won’t be the same in the coming weeks. Indeed, traders were expecting a cut in interest rates from the US Central Bank (Fed) for the month of December. Unfortunately, these hopes have been dampened by recent statements from Fed Chairman Jerome Powell. An announcement that had an immediate impact on Bitcoin and Ethereum prices.
- Jerome Powell confirmed the Fed’s cautious stance, dashing hopes of a December rate cut.
- Powell’s statements caused an immediate drop in the prices of Bitcoin and Ethereum, causing concern in the markets.
The Fed confirms its cautious stance
At the conference in Dallas on November 14 Jerome Powell claimed that despite the gradesimproving inflationThe US economy is still fragile enough to justify a restrictive monetary policy.
Powell emphasized that rate cuts are not an immediate priority for the Fed, explaining that:
“The economy is not sending any signals that we should rush to cut rates (…) The strength we currently see in the economy gives us the opportunity to approach our decisions with caution. »
The announcement surprised financial markets, which had been counting on a potential decline to ease pressure on risk assets, including cryptocurrencies.
Bitcoin and Ethereum under pressure: Prices react to Fed statement
After Jerome Powell’s statements, the price of Bitcoin (BTC) fell by about 1.5%, from $89,600 to $88,300 in the minutes that followed. At the time of writing, it was trading around 88,000, a 3.2% drop in the last 24 hours. Meanwhile, Ether (ETH) followed a similar trajectory, falling slightly to stabilize around $3,000.
Let’s calm down. Despite this short-term correctionthe crypto market remains on the rise overall. Bitcoin still shows a impressive weekly profit of 15%, while other assets such as Cardano (ADA), Ripple (XRP) and Stellar (XLM) have risen between 20% and 40% over the same period.
Powell’s remarks also weighed on expectations of a rate cut at the Fed’s December meeting. The odds of a rate cut fell to 62% from 83% a day earlier, reflecting more cautious market sentiment, according to CME FedWatch. Nevertheless, the overall tone remains favorable for a gradual recovery in risk assets, especially if economic signals improve in the coming weeks with the election of Donald Trump as the 47th US President.
