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Highlights
- Fed Chairman Jerome Powell expressed measured satisfaction with progress on inflation.
- Following Powell's comments, Bitcoin experienced a 3.63% decline, dropping to $60,700.
- Bitcoin faces multiple headwinds, including significant selling by miners to cover operational costs and potential sales from Mt. Gox creditors.
On Tuesday, July 2, Fed Chairman Jerome Powell expressed minor satisfaction with the progress on inflation but said that he’s still not confident to proceed with rate cuts. The Bitcoin price has come under selling pressure in the last 24 hours dropping 3.63% at press time and falling all the way to $60,700 levels.
Fed Chair Remains Uncertain on Rate Cuts
On Tuesday, Jerome Powell said that the central bank has made quite a bit of progress in bringing inflation down in comparison to the last year. “The last [inflation] reading and the one before it to a lesser extent, suggest that we are getting back on the disinflationary path,” said Powell.
However, he added that they need to be more confident that inflation, as per the US PPI data, is sustainably moving towards the Fed’s target of under 2%. Only then would the Fed start the process of loosening its monetary policy.
The Commerce Department’s personal consumption expenditures (PCE) price index, the Federal Reserve’s primary inflation gauge, rose by 2.6% over the past 12 months as of May. This marks a steady decline from approximately 4% a year ago. However, policymakers anticipate that it will not meet the Fed’s 2% target until 2026.
Also Read: Fed’s Preferred Inflation Gauge PCE Cools To 2.6%, Bitcoin & Altcoins To Rally?
This means that the Fed could hold interest rates higher for longer than expected. Thus, the lack of liquidity can put further selling pressure on risk-ON assets such as equities and crypto.
As reported by CoinGape, Bitcoin miners have been selling their BTCs in huge quantities and will continue to sell to meet their operational expenses.
What’s ahead for Bitcoin?
One of the major concerns for Bitcoin in the near term is the selling by Mt. Gox creditors, scheduled to receive their BTC finally after a decade of wait. Top market players like JPMorgan are already predicting a Bitcoin shake-up this week.
On the other hand, the excitement around spot Bitcoin ETFs has been waning with inflows reducing significantly in comparison to Q1. This shows that institutional players are staying cautious about seeking further exposure to the asset class.
Tight liquidity conditions have never favored Bitcoin in its history. So if the Fed refuses to pivot in the short term, ex can expect BTC sideways consolidation. Currently, investors are trying to defend $60,000 support. However, further selling pressure coming from Bitcoin miners can push the BTC price to $54,000.
Also Read: Bitcoin Price Slips Below $63K As Entity Dumps $114M BTC To Binance
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