Crypto Shows Mixed Reaction To Rate Cuts and Powell’s Speech
Jerome Powell gave a speech justifying the Fed’s decision to push one rate cut today. Even though a cut took place as predicted, most leading cryptoassets began falling after a momentary price boost.
Additionally, Powell directly addressed President Trump’s attempts to influence Fed policy, claiming that it didn’t impact today’s decisions. In previous speeches, he skirted around this elephant in the room.
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Powell’s FOMC Speech
The FOMC just announced its decision to cut US interest rates, a highly-telegraphed move with substantial market implications. Jerome Powell, Chair of the Federal Reserve, gave a speech to help explain this moderate decision.
In his speech, Powell discussed several negative economic factors in the US right now, including dour Jobs Reports and inflation concerns. These contribute to a degree of fiscal uncertainty which led Powell to stick with his conservative instincts, leaving tools available for future action.
“At today’s meeting, the Committee decided to lower the target range…by a quarter percentage point… and to continue reducing the size of our balance sheet. Changes to government policies continue to evolve, and their impacts on the economy remain uncertain,” he claimed.
Crypto’s Muted Response
The Fed is in a delicate position, balancing the concerns of inflation and employment. This conservative approach may help explain why crypto markets did not react much to Powell’s speech:
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Bitcoin, alongside the other leading cryptoassets, exhibited similar movements during the rate cuts and Powell’s speech. Although there were brief price spikes immediately after the announcement, subsequent drops ate these gains.
BTC, ETH, XRP, DOGE, ADA, and more all fell more than 1% since the Fed’s announcement.
Breaking with Precedent
However, Powell’s speech did differ from his previous statements in one key respect: he directly addressed claims that President Trump is attacking the Fed’s neutrality. Although Powell skirted around this issue at Jackson Hole, various journalists repeatedly asked him about these developments.
After all, Trump strenuously tried to fire one Fed Governor, and the last-minute appointment of a new one yesterday was highly unusual. This new FOMC member was the sole dissenting vote on today’s policy change, agitating for higher rate cuts.
Powell, for his part, firmly and publicly disagreed with Miran’s position on speedier rate cuts. Moreover, though, he affirmed that the Fed bases its decisions solely on the economic data, not partisan considerations. Still, based on the severity of this pressure, this argument might not hold.
To sum it up, Powell’s speech touched on a lot of economic concerns, many of which are quite uncertain. The crypto market’s chaotic and 24-hour price cycles operate on a completely different set of considerations, and it priced these cuts in weeks ago.
Still, these valuation drops are a little ominous. Considering that markets anticipated crypto to rally during Powell’s speech, it may be bearish that token prices are falling across the board.
