Bitcoin and crypto prices have struggled over the last week as details of a radical, crypto plan from Donald Trump’s son Don Jr. that could determine the “future of finance” trickle out.
The bitcoin price has dropped under $60,000 per bitcoin after breaking above the psychological level over the weekend (though one legendary trader said he’s expecting a China flip to blow up the latest rally).
Now, as iPhone maker Apple prepares to make what could be a game-changing update to its wallet app, bitcoin and crypto traders are braced for Federal Reserve chair Jerome Powell to signal the Fed will start cutting U.S. interest rates in September—described as “a golden opportunity” to seize the narrative.
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Federal Reserve chair Jerome Powell will speak this week at the central bank’s annual conference in … [+]
On Thursday, the Jackson Hole Economic Policy Symposium annual retreat for central bankers begins in Wyoming, with Fed chair Powell’s keynote speech on Friday expected to give markets either the thumbs up or thumbs down to an interest rate cut in September.
Powell is widely expected to signal a cut in borrowing costs after the Federal Open Market Committee last month held its benchmark rate in a range of 5.25% to 5.5% in what would be the first cut to interest rates in four years.
Goldman Sachs economists have said they are increasingly confident the Fed will cut interest rates by 0.25% when it meets in September but said that “another downside jobs surprise on September 6 could trigger” a 0.5% move following a weaker than expected jobs report earlier this month.
The Fed rapidly hiked interest rates in the aftermath of the Covid pandemic and lockdowns as inflation threatened to spiral out of control, partly due to its ultra-loose, Covid era monetary policy.
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The bitcoin price has rocketed back this year, climbing to over its previous all-time high of … [+]
Powell’s speech “comes in the context of an ocean of genuine uncertainty, both domestic and global, that’s amplified by the erosion of three key anchors of stability: steady and predictable economic growth, effective forward policy guidance, and only small pockets of technical vulnerability involving over-leveraged positions and excessive risk-taking by market participants,” Mohamed El-Erian, Pimco’s former chief executive and chief economic adviser at Allianz, wrote in a Bloomberg column.
“This is why it is critical for Powell to take advantage of the golden opportunity he has this Friday to regain control of the economic and policy narrative.”
Both crypto and stock markets have rebounded following a bitcoin price crash in early August, with traders still nervous that the rally could prove to be short-lived.
“Investors will be looking for hints on the trajectory of rate cuts, with a cut in September more or less a racing certainty in the minds of most observers,” AJ Bell investment director Russ Mould, said in emailed comments.
“Powell’s words and tone could help determine whether the market’s bounce since the short, sharp shock in early August is sustained.”