07/04 update below. This post was originally published on July 3
Bitcoin
Bitcoin
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The price of bitcoin has struggled over the past month, falling almost 15% as fears of a “true correction” swirl.
Now, after one of bitcoin’s biggest bulls has said the cryptocurrency could eventually replace the US dollar, Federal Reserve Chairman Jerome Powell has warned of a “critical period” for the Fed, calling deficit levels “unsustainable.” .
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US Federal Reserve Chairman Jerome Powell has warned that the Fed is facing a “critical” period that could … [+]
“The level of debt we have is completely sustainable, but the path we’re on is unsustainable,” Powell said during the European Central Bank conference in Portugal, reported by Financial Timesadding that the Biden administration was taking too many risks by “running a very large deficit at a time when we’re at full employment” and said that “you can’t run these levels in good economic times for very long .”
In May, Treasury Secretary Janet Yellen issued a dire warning about the spiraling pile of US $34 trillion debt that some believe could help push the price of bitcoin to $1 trillion over the next 18 months.
Bitcoin, crypto and stock market traders have been watching the Fed closely for signs that it will start cutting interest rates in recent months, with analysts forced to scale back expectations of around seven cuts in 2024 to just one or two .
“To achieve balance in monetary policy during this critical period, that’s really what I’m thinking about in the late hours,” Powell said in response to a question about his top concerns. AP reported.
07/04 Update: The price of bitcoin and the crypto market has suffered a major crash over the past 24 hours, with the price of bitcoin falling below $60,000 and wiping $200 billion from the combined crypto market since 1 July. Ethereum and the rest of the market have fallen more than bitcoin, with ethereum rival solana, Telegram-linked toncoin and meme-based dogecoin all down almost 10% since this time yesterday.
“Bitcoin is breaking important technical and psychological levels at $60,000,” Markus Thielen, founder of 10x Research, wrote in emailed comments.
“This is a key level for bitcoin miners and buyers of bitcoin exchange-traded funds (ETFs), and also broadly marks the end (support) of the three-month trading range. Price declines could accelerate as support breaks and sellers scramble to find liquidity only ill-informed traders are willing to buy here A break of this support could cause a sharp drop to $50,000.
Last month, the Federal Reserve left interest rates unchanged and signaled it would make just one cut in 2024, with more to come in 2025. The Fed has come under pressure to cut interest rates after raised them at a record clip after massive Covid-era stimulus spending and money printing sent inflation spiraling out of control.
“Powell said the US was back on a ‘disinflationary path’ but added more data was needed before the Fed would consider cutting rates,” Russ Mould, chief investment officer at AJ Bell, said in emailed comments. “That last phrase sounds a bit like a broken record as far as the market is concerned, so the most important part of Powell’s speech was the reference to disinflation, as investors interpreted that to mean there’s a stronger case for cutting rates. rates soon.”
Eyes are now turning to Wednesday’s release of minutes of the Fed’s June meeting and Friday’s jobs report, which could “cement” expectations for a September interest rate cut if it shows hiring has slowed.
“A softer-than-expected jobs report on Friday, if it were to occur, would likely further cement the case for said cut, which markets are giving a roughly 70% chance — perhaps, a touch weak, ” said Michael Brown, senior research strategist at Pepperstone MarketWatch.
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The price of bitcoin has fallen from its recent peak of over $70,000 per bitcoin.
The higher interest rate environment for longer has prompted a warning from analysts at the world’s largest asset manager BlackRock, who said an “unprecedented” scenario is unfolding that could hit the price of bitcoin and the stock market. crypts.
“We see central banks forced to keep interest rates higher than before the pandemic to address ongoing inflationary pressures,” analysts at BlackRock, which has helped engineer a bitcoin price boom this year by leading a fund exchange traded bitcoin (ETF). revolution on Wall Street, wrote in a report.