On Thursday, Bitcoin’s price continues to whipsaw along the $36,500 area, hours after Jerome Powell’s speech following the latest monetary policy statement, behind a long-day price descent on Wednesday even as fresh fears of the FED raising borrowing costs to ward off ballooning inflation lingers.
BTCUSD Chart by TradingView
Other markets including stocks and U.S. equity futures continued to feel the heat, with the FED increasingly showing signs of failing to reach a consensus on how to push back multi-decade inflation to its 2% target.
According to Powell, tackling inflation occasioned by ultra-easy pandemic support from the government has been the biggest problem facing the FED, and cutting back credit remains a top priority.
“Both sides of the mandate are calling for us to move steadily away from the very highly accommodative policies that were put in place during the challenging conditions that the economy faced earlier in the pandemic,” he said.
Powell who has emphasized that the U.S. economy is stronger and that “inflation is transitory” in the past is now faced with even a harder task of slashing the unfeasible $8 trillion balance sheet. This is even as the FED’s current interest rate continues to stay at the near-zero level despite investors expecting at least four rate hikes this year without hurting the markets.
However, the FED is reportedly considering raising interest rates in March, much to the clarification of the Federal Open Market Committee meeting report which failed to specify a timeframe only stating “soon”.
“The committee is of a mind to raise the federal funds rate at the March meeting assuming that the conditions are appropriate for doing so,” he added.
The recent drop by Bitcoin in tandem with major stock indexes such as the S&P 500 and the Nasdaq composite has driven market participants to believe the tide of the bearish sentiment that has gripped the markets since last week may be hard to turn. Other crypto traders are confident that Bitcoin will continue exuding strength despite the fear and uncertainty being caused by the FED.
“Fed action is a factor, but it is not the biggest thing we worry about- we are interested in what’s happening with crypto exchanges, what’s happening in the trenches of trading and DeFi,” says Michael Safai, a managing partner at quantitative trading firm Dexterity Capital.
That said, traders are pinpointing $30,000 to be Bitcoin’s floor should the price slip lower, with $40,000 remaining a key resistance area.