The bitcoin price fell yesterday from $21,800 to $20,200, within 24 hours, after the President of the United States Federal Reserve, Jerome Powell, predicted difficult times for the American economy.
Appearing at the Kansas City Federal Reserve’s (Fed) annual conference in Jackson Hole, Wyoming, Powell warned that he must choose one of two paths: between greater pain that would lead to uncontrolled inflation or a less implied path. That families and businesses would have to suffer from tighter and more restrictive monetary policy, in order to restore price stability.
He said that he would choose the second path, and he expected interest rates to rise more than the increases that were already expected for the next meeting of the US central bank, which will be held next September.
Federal Reserve officials raised interest rates by 0.75 percentage points at each of their last meetings, most recently in July, to a range between 2.25% and 2.5%.
Analysts have pointed out that the measures that the Federal Reserve will impose will keep investors away from risks, so the downward trend of the cryptocurrency is expected to continue.
“Last week’s drop has put bears in charge. It will take some time for the market to reverse,” said analyst Alex Krueger of crypto-asset website CoinDesk.
But it’s not just Bitcoin that has suffered from the onslaught of news. Markets reacted lower as major indexes on Wall Street turned red after the speech.
At the close of operations on the New York Stock Exchange, the Dow Jones index subtracted 1008.38 points and fell to 3,2283.40 integers, down 3.03%.
The selective S&P 500 Index fell 3.37%, or 141.46 points, to 4,057.66 points. For its part, the Nasdaq Market Composite Index, which groups major technology companies, fell 3.94%, or 497.56 integers, to stand at 12,141.71 units.
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