Bitcoin, stocks and commodities right after mentioning the Fed chairman’s policy change
Global financial markets took a hit on November 30 after comments from Federal Reserve Chairman Jerome Powell suggested inflation and the Covid-19 variant of Omicron pose a growing threat, and banks’ loose monetary policies could come sooner than expected end up.
After Powell’s comments, Bitcoin (BTC) rebounded and the digital asset rose 6% from a low of $ 55,840 in the early hours of November 30th to an intraday high of $ 59,200, but prices fell below the Fed’s speech $ 57,000.
At the time of writing, Bitcoin has bounced back to $ 58,000, but a variety of technical indicators are signaling that traders are not confident about BTC’s next move.
Affected stocks and commodities
Not only Bitcoin was hit hard by the Fed’s comments. According to economist and analyst CryptoQuant Jan Wüstenfeld, the dollar index (DXY) rose while the DOW, gold and other stock indices fell.
“The US dollar index rebounded when Powell realized that the Fed could accelerate the decline (regardless of how reliably). Everything else goes down. Gold included. ”
Related: Vladimir Putin Says Cryptocurrencies Are “High Risk”
The Fed is behaving “binary”
Market analyst and former CFO Nik Bhatia provides further insight into the action of the Fed, highlighting the fact that the Fed is “incapable of reacting to dynamic conditions” and “behaves in a binary” way.
“If all goes well, politics could be tightened. When the economy is in trouble, politics is eased. “
According to Bhatia, “US inflation is on the rise” with “headlines pointing to a decade-long high in headline prices.”
At the same time, the Fed implemented “basically the simplest monetary policy ever”, prompting Bhatia to warn that “as inflation rises, this will soon be over”.
“The Fed is clearly heading for a monetary policy mistake as it tightens monetary policy despite a decline in long-term growth and inflation expectations due to tighter monetary policy (which is why this is called a monetary policy mistake).”
It is no longer “temporary inflation”.
Additionally, Powell’s comments acknowledge that the one-year period of “inflation transients” is now coming to an end, and the Federal Reserve Chairman suggests that it is time to temporarily “withdraw” the narrative.
Federal Reserve Chairman Jerome Powell has just proposed that the word “temporarily” be stopped when referring to inflation.
“I think maybe now is the right time to take that word back and try to explain more clearly what we mean.”
It’s never temporary and everyone knows it.
– Pomp (@APompliano) November 30, 2021
While it’s refreshing to see a little more honesty from the Fed, crypto expert Anthony Pompliano pointed out that the average person knows that inflation is inherently “transitory” and likely to be a problem in 2022 as well.
The total crypto market cap is $ 2.638 trillion and the dominance of Bitcoin is 41.2%.