Jerome Powell says there is no more inflation, bitcoin and stock prices are falling
Global financial markets took a hit on Nov. 30 after comments from Federal Reserve Chairman Jerome Powell indicated that inflation and the COVID-19 variant of Omicron were an increasing threat and the bank’s loose monetary policy sooner than expected to end.
Prior to Powell’s comments, Bitcoin rose 6% from a low of $ 55,840 during the November 30 session to an intraday high of $ 59,200, but the price fell below $ 57,000 after the speech.
BTC / USDT 4-hour chart. Source: TradingView
At the time of writing, Bitcoin has bounced back to $ 57,137, 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 CryptoQuant economist and analyst Jan Wüstenfeld, the dollar index (DXY) has risen while the DOW, gold and other stock indices have fallen.
“The US dollar index rebounded when Powell noted that the Fed could raise (tighten) the taper rate. Everything else goes down, including gold. “
DXY vs. Gold vs. BTC / USD vs. SPX. Source: Twitter
Market analyst and former CFO Nik Bhatia provides further insights into the Fed’s actions, emphasizing that the Fed is “unable to react to dynamic conditions” and instead “behaves in an ambivalent manner.”
“If things go well, they can tighten politics. When the economy is in trouble, they loosen up politics. “
According to Bhatia, “inflation in the United States” is on the rise, with “statistics pointing to highs in total prices over several decades”.
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 making a policy mistake by tightening monetary policy despite long-term growth and lower inflation expectations (which is why it is also known as a policy mistake).”
No more “temporary inflation”
Additionally, Powell’s comments acknowledge that the long-standing mantra of “temporary inflation” is now coming to an end, and the Fed chairman suggests that it is time to put a temporary end to the narrative.
While the Fed has been a bit more honest, crypto expert Anthony Pompliano pointed out that the average person knows that inflation is not inherently “temporary” and may still be a problem in 2022.
The total crypto market cap is $ 2.638 trillion and the dominance of Bitcoin is 41.2%.
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According to Cointelegraph