Bitcoin declined 1.5% to $83,700 during Federal Reserve Chair Jerome Powell's speech at the Economic Club of Chicago on Wednesday, later stabilizing around $83,800. The dip mirrored broader market movements, with the S&P 500 falling 2% intraday before recovering slightly. Powell's comments highlighted several economic concerns that impacted risk assets.
The Fed chair noted recent tariff increases have been larger than anticipated and may create more lasting economic effects than initially projected. While expecting temporary inflation spikes from these trade policies, Powell cautioned it remains too early to assess their long-term consequences. He specifically referenced potential tension between the Federal Reserve's dual mandate objectives of price stability and maximum employment.
Powell's remarks also touched on cryptocurrency regulation, expressing support for stablecoin legislation and suggesting potential easing of crypto-related rules for banks. These regulatory signals created mixed reactions in digital asset markets. The combination of macroeconomic uncertainty and shifting regulatory expectations contributed to Bitcoin's price volatility during the trading session.
Market analysts observed that Bitcoin's movement reflected its growing sensitivity to traditional financial indicators and central bank communications. The cryptocurrency's partial recovery later in the day suggested some investors viewed the dip as a buying opportunity, though trading volumes remained cautious. The event underscored how macroeconomic developments and regulatory signals increasingly influence cryptocurrency valuations alongside sector-specific factors.
