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NAIROBI (CoinChapter.com)—Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday morning could steer Bitcoin traders’ strategies in the coming weeks.
Powell’s Jackson Hole speech at the annual gathering, which draws global central bankers and economists, could help showcase crucial monetary policy insights.
The Fed chair would likely focus on the economic outlook, particularly regarding interest rate adjustments—a subject of keen interest for Bitcoin traders.
What Bitcoin Traders Should Watch For
Bitcoin traders will watch for dovish signals as Powell takes the stage on Aug. 23. The market expects imminent rate cuts, which have historically had a mixed impact on Bitcoin.
During the Fed’s last rate-cutting cycle in 2019, Bitcoin saw a slight decline. It wasn’t until the COVID-19 market crash that a major bull run began. The Stacks Podcast’s host, Luke Martin, noted that the “money printer” policies during the pandemic fueled Bitcoin’s explosive growth.
BTC/USD vs. Fed funds rate. Source: Luke Martin
Meanwhile, the CME Group’s FedWatch Tool currently suggests a strong likelihood of a 0.25% rate cut in Sept. 2024. If Powell confirms the speculations, the news could trigger increased buying activity in Bitcoin. However, the potential for volatility is high.
Powell has a history of delivering speeches affirming or disrupting market expectations. A more dovish stance could lead to a bullish surge in Bitcoin, particularly if Powell signals that the Fed is ready to accelerate rate cuts to combat the economic slowdown.
Target rate probabilities for Sept. 18, Fed meeting with 71.5% favoring 500-525 bps. Source: CME Group
Conversely, if Powell adopts a cautious tone, emphasizing a gradual approach to rate cuts, Bitcoin traders may face uncertainty. This scenario could lead to choppy trading conditions, with Bitcoin prices oscillating as the market digests Powell’s remarks.
Market Reactions and Future Outlook for Bitcoin
The immediate reaction to Powell’s Jackson Hole speech will likely set the tone for Bitcoin trading in the weeks ahead. Currently trading at $60,868.81, Bitcoin has remained in a tight range as traders await Powell’s remarks.
With a market cap of $1.2 trillion and a 24-hour trading volume of $24.64 billion, the market is focused on potential cues for a 0.25% rate cut in Sept.
BTC/USD 10-day price chart. Source: CoinMarketCap
Traders have identified $62,000 as a key resistance level. If this threshold is surpassed, there is potential for a breakout toward $64,000-$65,000. TOBTC recently noted that Bitcoin is trading around $61,000 as markets anticipate Powell’s speech, which could influence future interest rate decisions.
Bitcoin is trading around $61,000 ahead of Jackson Hole symposium. Source: X
However, the possibility of Powell surprising the market with a more hawkish stance cannot be ruled out. Powell has occasionally caught markets off guard in past speeches, leading to swift and substantial price movements in risk assets, including Bitcoin. The 2019 Jackson Hole speech, which sent the S&P 500 tumbling, serves as a reminder of how these events can sway market sentiment.
Looking beyond the immediate aftermath, Powell’s speech could have profound long-term implications for Bitcoin. If the Fed signals a sustained easing cycle, the influx of liquidity could fuel a broader rally in risk assets, with Bitcoin positioned to benefit.
On the other hand, if Powell’s comments suggest a more cautious approach, traders may need to recalibrate their strategies, potentially facing a period of heightened volatility.
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