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Bitcoin Price Slides to $22K as Powell Warns on Inflation
The Federal Reserve chairman said economic figures from January were stronger than expected.
Updated Mar 7, 2023, 10:21 p.m. Published Mar 7, 2023, 3:20 p.m.
Inflationary pressures are running higher than expected, Federal Reserve Chairman Jerome Powell said in prepared remarks before the U.S. Senate Banking Committee on Tuesday.
Bitcoin (BTC) fell about 1.6% to below $22,000 in the immediate aftermath of the release of the remarks. The price has bounced a bit since, recently trading at $22,100, while the S&P 500 was down 0.75%.
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"The data from January on employment, consumer spending, manufacturing production and inflation have partly reversed the softening [inflation] trends," Powell said.
While allowing that unseasonably warm weather in January might be responsible for the higher-than-expected inflation figures, Powell said the "process" of returning inflation to the Fed's target of 2% "has a long way to go and is likely to be bumpy."
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Japan’s Higher Rates Puts Bitcoin in the Crosshairs of a Yen Carry Unwind
A stronger yen typically coincides with de-risking across macro portfolios, and that dynamic could tighten liquidity conditions that recently helped bitcoin rebound from November’s lows.
What to know:
- The Bank of Japan is expected to raise interest rates to 0.75% at its December meeting, the highest since 1995, affecting global markets including cryptocurrencies.
- A stronger yen could lead to de-risking in macro portfolios, impacting liquidity conditions that have supported bitcoin's recent recovery.
- Governor Kazuo Ueda indicated a high probability of a rate hike, with officials prepared for further tightening if their economic outlook supports it.
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