Fed Chair Jerome Powell raised stark concerns over the effects of President Trump's tariffs policy.
Bitcoin and stocks both tumbled on Powell warning.
"Very hawkish," said one analyst, adding that a May rate cut appears off the table, short of some drastic change in the market or economic situation.
A modest bitcoin rally to a possible challenge of the $86,000 level quickly reversed during U.S. afternoon trading hours on Wednesday as Federal Reserve Chairman Jerome Powell warned on the effects of President Trump's tariff regime.
"The level of the tariff increases announced so far is significantly larger than anticipated," said Powell in a speech. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth."
The price of bitcoin ($BTC ) fell about 2.5% in the minutes following the Powell remarks, now trading at $84,447.53, down 1.5% over the past 24 hours.
U.S. stocks, which had been trying to mount a comeback from opening declines, also were hit, the Nasdaq slumping 3.4% to a session low.
Powell also mentioned that as crypto is becoming more mainstream, there's a need for a legal framework for stablecoins. He said that banking regulation around crypto will likely be “partially relaxed.”
The U.S. Senate Banking Committee cleared a bill to regulate stablecoin issuers in March, marking the first committee approval and a significant step closer to law in the U.S.
"I would have at least expected him to give a nod to the elevated volatility and ruptures forming in the treasury market but he did not do that," Thompson said.
Powell's tone suggests that investors should temper their expectations for rate cuts in the upcoming meetings, said Thompson, which could weigh on risk assets including crypto.
