The market value of Bitcoin took a hit following remarks from Jerome Powell, the United States Federal Reserve Chair, showing a hesitance to further decrease interest rates in December. The news prompted a roughly 3% fall in Bitcoin’s value, running counter to the hopes of investors in crypto and related markets.
Powell, during a speech in Dallas, Texas, on Nov. 14, stated, “The economy is not sending any signals that we need to be in a hurry to lower rates.” This comes after two rate cuts in quick succession; one in September and another in November. The decision on where to take interest rates next will be announced on December 18th.
“We approach our decisions carefully due to the current strength in the economy. The path of the policy rate will depend on how the incoming data and the economic outlook evolve,” Powell further explained. Following his words, Bitcoin saw a decrease of approximately 2.79%, sliding to $86,979. Although, at press time, the leading cryptocurrency had made a slight recovery, sitting at $88,100.
Following Powell’s indications, market expectations for a rate cut in December have weakened. The trading resource, The Kobessi Letter, noted that “odds of a 25 basis points rate cut are down to just 59%.”
Bitcoin investors keenly watch interest rates since low-interest rates diminish the appeal of safer options like bonds and term deposits. This leads investors to consider riskier and alternative markets, including cryptocurrencies and tech stocks.
Moreover, inflation data from the US, released on Nov. 14th, marginally outperforming the market expectations could also diminish the urgency of the Federal Reserve to alter interest rates. It’s all happening amidst worries about the impact of the economic policies proposed by President Trump. According to Nouriel Roubini, an economist, while some aspects of Trump’s economic policies may boost growth, other facets could potentially drive interest rates higher.