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Highlights
- The US jobs data and inflation stood higher than expected delaying the rate cut possibility.
- Fed's higher interest rates for a long time can put pressure on risk-ON assets like Bitcoin.
- Bitcoin price has already retraced 10% from its all-time highs finding support at $65,000.
Federal Reserve officials, led by Chairman Jerome Powell, indicated on Wednesday, April 3, that further deliberation is needed before implementing any interest rate cuts. While financial analysts have speculated about potential rate cuts by June 2024, there remains uncertainty surrounding this timeline. Consequently, risk-ON assets such as Bitcoin and equities may experience extended consolidation before experiencing significant upward momentum.
Jerome Powell Points Out to the Jobs Data
In a speech delivered to the Stanford Graduate School of Business, Powell remarked that recent reports on both job gains and inflation surpassed expectations. He emphasized that although policymakers are generally in consensus regarding potential rate reductions later in the year, such actions will only be taken when they are “more confident that inflation is steadily declining towards the Fed’s target of 2%”.
Powell’s remarks are in tune with the Fed’s overall stand as it seeks to balance the risks of cutting interest rates before interest comes under the desired levels and is no more a hurdle in suppressing economic activity more than required.
In separate remarks made to CNBC on Wednesday, Atlanta Fed President Raphael Bostic suggested that interest rates should probably not be lowered until the fourth quarter of this year. Bostic foresees that only a single quarter-percentage-point reduction will be suitable in 2024, which is considerably less than the three or more cuts expected by most of his peers. He added:
“We’ve seen inflation kind of become much more bumpy. If the economy evolves as I expect, and that’s going to be seeing continued robustness in GDP and employment, and a slow decline in inflation over the course of the year, I think it will be appropriate for us to start moving down at the end of this year, the fourth quarter.”
Bitcoin (BTC) Price Under Pressure
Higher interest rates have always been a deterrent to risk-ON assets such as Bitcoin, crypto, and equities. Thus, if the Fed delays its decision to pivot, BTC and crypto could enter a longer period of consolidation.
On-chain data provider Santiment reports that Bitcoin’s decline to $65.5K has had a ripple effect across the cryptocurrency market. Over the past seven days, there has been a 3.61% decrease in overall market capitalization, while trading volume has dropped by 18.84% compared to the previous week.
On the other hand, the institutional demand for Bitcoin remains high. On the other hand, Robert Kiyosaki said that the Fed is just fooling around with inflation and that the best assets to buy today would be gold, silver and Bitcoin.
Fed Chairman Powell finally told the truth. Last week he finally admitted inflation is winning. The Fed can no longer promise I flation at 2% or that inflation is “transitory.” Again he finally stopped lying. Congratulations.
The problem is most people have no idea what the…
— Robert Kiyosaki (@theRealKiyosaki) April 3, 2024
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