Bitcoin’s price took a sharp turn downwards on November 14, slipping by nearly 3% following U.S. Fed Chair Jerome Powell’s remarks that additional rate cuts are not imminent. Powell, speaking in Dallas, Texas, highlighted the strength of the U.S. economy as a reason to avoid rushing into further cuts.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” he explained. His statement follows two recent rate cuts in September and November, signaling to both crypto and traditional markets that a long-anticipated “Fed pivot” may remain out of reach.
Powell’s cautious tone immediately shook market confidence, with Bitcoin’s price falling from $86,979 following a minor recovery, according to CoinMarketCap. The Fed’s next rate decision, scheduled for December 18, has traders wondering if it will break with the crypto community’s expectations.
Traders Scale Back on Rate Cut Expectations
Before Powell’s statement, there had been considerable market anticipation for another potential rate cut in December. But after the Fed’s head cited economic stability as justification for holding back, market forecasts shifted.
Trading analysis from The Kobessi Letter, a well-known financial insights provider, pointed out that expectations for a 25 basis points rate cut in December dropped to 59%. “The ‘Fed pivot’ is being undone once again,” the Kobessi Letter remarked on X, reflecting the growing sentiment that investors might be too hopeful for a rate shift in the near term.
The Fed’s stance on interest rates has significant ramifications for Bitcoin and other digital assets. When rates are high, safer investments such as bonds become more attractive compared to riskier assets like cryptocurrencies and tech stocks. Consequently, potential delays in rate cuts could curb investors’ appetite for crypto, limiting upward momentum.
Inflation and Fed Policy Add to Market Uncertainty
Adding to the complex economic landscape is inflation data released the same day, with the U.S. Producer Price Index (PPI) for October showing a 2.4% annual increase, slightly above expectations. While marginal, this uptick gives the Fed less pressure to lower rates, as it suggests economic resilience.
Bitcoin investors, already navigating an evolving financial climate, now face heightened uncertainty as the Fed’s next moves unfold against the backdrop of other policies that could influence interest rates.
Economist Nouriel Roubini, speaking to ABC News, cautioned that Trump-era policies might have mixed effects on the economy. Pro-business measures support growth but tariffs and trade tensions drive interest rates higher.
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