The global financial market was beaten on November 30 after comments from US Federal Reserve Chairman Jerome Powell, who suggested that inflation and the Omicron COVID-19 variant are a growing threat, and that the bank’s easy money policy may end faster than expected.
Before Powell’s comments, Bitcoin (BTC) was on the rise and the digital asset rose 6% from a low of $ 55,840 in the early trading hours of November 30 to an intraday high of $ 59,200, but the price fell to as much as $ 59,200 Under $ 57,000 after the Fed. comments.
4 hour BTC / USDT chart. Source: TradingView
At the time of writing, Bitcoin has managed to climb to $ 58,000, but a number of technical indicators indicate that traders are uncertain about BTC’s next move.
Shares and commodities hit
It’s not just Bitcoin that has been hit hard by the Fed’s comments. According to CryptoQuant Economist and analyst Jan Westenfeld, the dollar index (DXY) rose while DOW, gold and other stocks fell.
DXY vs. Gold vs. BTC / USD vs. SPX. Source: Twitter
“The US dollar index is growing amid Powell’s comments that the Fed could accelerate the fall in interest rates (no matter how sensible). Everything else is going down. It includes gold.”
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Fed “acts one-way”
A deeper understanding of the Fed’s actions was provided by market analyst and former finance minister Nick Bhatia, who highlighted the fact that the Fed “does not have the ability to respond to dynamic conditions” and instead “acts in a binary way.”
If all goes well, it could lead to a tightening of policies. If the economy is in trouble, it simplifies politics. ”
According to Bhatia, “US inflation is getting stronger” and “key statistics indicate multi-year increases in the overall price level.”
At the same time, the Fed implemented “the easiest monetary policy ever,” prompting Bhatia to warn that “this will soon end up raising inflation.”
“The Fed is clearly heading for a policy error where it is tightening its policy despite lowering long-term growth and inflation expectations due to the very tightening of monetary policy (which is why it is called a policy error).”
It is no longer a “temporary hypertrophy”.
Interestingly, Powell’s comments acknowledge that the years-long “transient inflation” mantra is now coming to an end, and the Fed leader suggests that it is time to “leave the temporary narrative.”
Nice to see more honesty coming from the Federal Reserve, crypto expert Anthony Pompliano noted that the average person knows all the time that inflation is not temporary and is likely to remain a problem in 2022 as well.
The total market value of cryptocurrency is now $ 2.638 trillion, with Bitcoin dominance of 41.2%.