• Crypto and stocks reacted negatively to comments by Federal Reserve Chair Jerome Powell on inflation.
• Bitcoin dropped to a 24-hour low of $22,120 while the S&P 500 fell 1%.
• Investors are likely to turn their attention to the next Fed meeting in March.
Crypto Turns Red After Fed Chair Jerome Powell Hints at Higher Rates
Cryptocurrencies and stocks reacted negatively after Federal Reserve Chair Jerome Powell hinted that interest rates could go up in response to recent economic data that came in hotter than expected. Bitcoin touched 24-hour lows of $22,120 while the S&P 500 dropped 1%.
Reaction to Powell’s Comments
Powell made his first of two appearances before US Congress on Tuesday, speaking at the Senate Banking Committee about monetary policy and inflation. He noted that if outlook indicated there was a need for faster tightening, then it would be warranted for the Fed to consider raising interest rates further.
Impact on Cryptocurrency and Stocks
Investors appeared spooked by Powell’s remarks, leading crypto, stocks and bonds to react lower as the dollar index rose. Bitcoin dropped towards support around $22,100 on broader market reaction while the S&P 500 fell by 1%, the Dow Jones Industrial Average shed 0.6% and the Nasdaq Composite 0.9%.
Economist Mohamed El-Erian commented on the market’s reaction and what Powell’s testimony projected, noting that it tilted more towards a hawkish stance compared to earlier dovish mentions of disinflation at prior press conferences.
Investors are now likely to turn their attention to the next Fed meeting in March as they watch developments closely.