Bitcoin investors were rattled today as Federal Reserve Chair Jerome Powell dashed hopes for near-term rate cuts, citing rising tariff inflation. The cryptocurrency market reacted sharply, with Bitcoin plunging below $116,000. Here’s what you need to know about the latest Bitcoin news and its implications.
Jerome Powell’s Hawkish Stance Shakes Markets
In a recent FOMC speech, Powell emphasized that the Fed will not cut rates soon due to inflationary pressures from Trump-era tariffs. Key takeaways:
- Core PCE inflation rose to 2.8%, above forecasts.
- Market odds of a September rate cut dropped to 47.1% from 63.7%.
- Powell warned of prolonged higher rates if inflation persists.
How Bitcoin Reacted to the News
Bitcoin, often seen as a risk-on asset, fell sharply as investors digested Powell’s remarks:
| Asset | Price Change |
|---|---|
| Bitcoin (BTC) | -5.2% |
| S&P 500 | -1.8% |
What’s Next for the Cryptocurrency Market?
Analysts suggest Bitcoin’s sensitivity to macro signals makes it volatile in this environment. Key factors to watch:
- Upcoming PCE data releases.
- Employment figures due tomorrow.
- Fed meetings in October and December.
FAQs
Q: Why did Bitcoin drop after Powell’s speech?
A: Bitcoin fell as investors priced in prolonged high interest rates, reducing risk appetite.
Q: Will the Fed cut rates in 2025?
A: Current market pricing suggests a 38.3% chance of a cut in October, but uncertainty remains high.
Q: How does inflation impact Bitcoin?
A: Bitcoin often struggles when inflation prompts central banks to maintain restrictive policies.
Q: Should cryptocurrency investors be worried?
A: Short-term volatility is likely, but long-term Bitcoin investors may see this as a buying opportunity.
