Bitcoin
Bitcoin
has suddenly crashed back toward $60,000 per bitcoin after one billionaire bitcoin buyer revealed they’ve flipped on bitcoin.
The bitcoin price has struggled over the last month, dropping almost 15%, as fears of a “true correction” swirl.
Now, after one of the biggest bitcoin bulls has said the cryptocurrency could eventually replace the U.S. dollar, Federal Reserve chair Jerome Powell has warned of a “critical period” for the Fed, calling deficit levels “unsustainable.”
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U.S. Federal Reserve chair Jerome Powell has warned the Fed is facing a “critical” period that could … [+]
Getty Images“The level of debt we have is completely sustainable but the path we are on is unsustainable,” Powell said during the European Central Bank’s Portugal conference, it was reported by the Financial Times, adding the Biden administration was taking excessive risks by “running a very large deficit at a time when we are at full employment” and said “you can’t run these levels in good economic times for very long.”
In May, Treasury secretary Janet Yellen issued a serious warning over the spiraling $34 trillion U.S. debt pile that some think could help propel the bitcoin price to $1 million over the next 18 months.
Bitcoin, crypto and stock market traders have been closely watching the Fed for signs it will begin cutting interest rates in recent months, with analysts forced to dial back expectations of around seven cuts in 2024 to just one or two.
“Getting the balance on monetary policy right during this critical period, that’s really what I think about in the wee hours,” Powell said in response to a question about his top worries, the AP reported.
Last month, the Federal Reserve left interest rates unchanged and signaled it would make just one cut in 2024, with more to come in 2025. The Fed has come under pressure to cut interest rates after hiking them at a record-setting clip in the aftermath of huge Covid-era stimulus spending and money printing that sent inflation spiraling out of control.
“Powell said the U.S. was back on a ‘disinflationary path’ but added that more data was required before the Fed would consider cutting rates,” Russ Mould, investment director at AJ Bell, said in emailed comments. “The latter phrase sounds a bit like a broken record as far as the market is concerned, so the most important part of Powell’s speech was the reference to disinflation, as investors interpreted it to mean there is a stronger case for cutting rates soon.”
On Wednesday, the Fed will release minutes of its June meeting with he combination of the data and the minutes will be particularly interesting given economists and some Federal Reserve officials are increasingly on alert for signs the labor market is losing steam.
Eyes are now turning to Wednesday’s release of the Fed’s June meeting minutes and Friday’s jobs report which could “cement” expectations of a September interest rate cut if it shows hiring has slowed.
“A softer-than-expected jobs report on Friday, were it to come to pass, would likely further cement the case for said cut, to which markets assign a roughly 70% chance—perhaps, a touch underdone,” Michael Brown, senior research strategist at Pepperstone, told MarketWatch.
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The bitcoin price has dropped back from its recent peak of over $70,000 per bitcoin.
Forbes Digital AssetsThe higher-for-longer interest rate environment has triggered a warning from analysts at the world’s largest asset manager BlackRock, who said an “unprecedented” scenario is unfolding that could hit the bitcoin price and crypto market.
“We see central banks forced to keep interest rates higher than pre-pandemic to tackle persistent inflationary pressures,” the analysts at BlackRock, which has helped to engineer a bitcoin price boom this year by leading a spot bitcoin exchange-traded fund (ETF) revolution on Wall Street, wrote in a report.
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