On the eve of Powell's speech in Jackson Hole, the cryptocurrency market evaporated $120 billion, with the market focusing on the tone of this meeting
As billions of dollars exited the cryptocurrency market, the market adjustment deepened, and the current market focus is on Federal Reserve Chairman Powell's stance in his speech on Friday.
In the past 24 hours, approximately $120 billion has flowed out of the cryptocurrency market, causing the total market capitalization to drop to a two-week low of $3.73 trillion during early Asian trading on Wednesday. Bitcoin once fell below $113,000, reaching its lowest level in 17 days; meanwhile, Ethereum dropped below $4,100, erasing all gains from last week.
Bitcoin writer Jason Williams stated that the market sell-off is in anticipation of Powell's speech on Friday in Jackson Hole, and the current price trend seems to reflect the Federal Reserve's hawkish stance.
He also added that the market now considers a rate cut in September to be no longer a certainty, and if Powell hints that a rate cut may not be implemented, bearish sentiment may persist. However, if Powell's speech is dovish and leans towards a rate cut, the market will accelerate its expectations for a rise.
At the same time, if the Federal Reserve does not take action to cut rates in September, the market may have to wait 4 to 6 weeks for more clear signals regarding a possible rate cut in October. Additionally, it is evident from the current price trend that the market dislikes uncertainty.
According to the CME's “FedWatch” tool, the probability of a rate cut on September 17 remains as high as 85.1%. However, if Powell makes tough statements on Friday, this probability could drop significantly.
Trump has previously criticized the Federal Reserve Chairman for being slow to act, emphasizing that there are currently no signs of inflation and all indications point to the market's urgent need for a significant rate cut.
Meanwhile, a low-interest-rate environment not only reduces borrowing costs but also injects more liquidity into risk assets like cryptocurrencies, thereby creating favorable investment conditions for the financial market.
As of now, BTC has slightly rebounded to around $113,000 in trading price. However, its next step will still depend on whether Federal Reserve Chairman Powell reveals any intentions for a rate cut in his speech at Friday's meeting.
