Crypto Plunges as Fed Chair Hints at Higher Rates
• Crypto and stocks reacted negatively to comments about US inflation by Fed Chair Jerome Powell. Bitcoin traded to lows of $22,120 while the S&P 500 fell 1%.
• Investors are now likely to turn their attention to the next Fed meeting in March, following Powell’s remarks on interest rates.
• The reaction saw US stocks slip after Monday’s gains, with investors appearing to have been spooked by Powell’s remarks on interest rates.
Fed Chair Jerome Powell Hints at Higher Rates
Fed Chair Jerome Powell hinted at higher interest rates during his first appearance before US Congress on Tuesday, causing a negative reaction in both the cryptocurrency and stock markets.
Cryptocurrency Market Plummets
Cryptocurrencies fell substantially as a result of this news, with Bitcoin trading towards support around $22,100. Ethereum also dropped significantly, falling to support near $1,540.
Stocks React Negatively
The US stock market also reacted negatively to this news – the S&P 500 dropped by 1%, while the Dow Jones Industrial Average and the Nasdaq Composite shed 0.6% and 0.9% respectively. Economist Mohamed El-Erian pointed out the market’s reaction and what Powell’s testimony projects via Twitter.
Focus Shifts To March Meeting
Investors are now likely to turn their attention to the next Federal Reserve meeting in March as they await further announcements from Powell regarding monetary policy and inflation outlooks for 2021.
Overall, crypto and stocks reacted negatively to comments about US inflation by Fed Chair Jerome Powell, resulting in Bitcoin trading towards 24-hour lows of $22,120 while other indices experienced losses too due to worries about higher interest rates being put into effect soon.