Bitcoin almost reclaims $50K as Powell confirms tapering in Jackson Hole speech

Bitcoin, Jerome Powell Jackson Hole tapering taper
“Governor Jerome Powell speaks at Brookings panel, ‘Are there structural issues in U.S. bond markets?'” by BrookingsInst is licensed under CC BY-NC-ND 2.0

Key takeaways:

  • Jerome Powell confirmed the Fed’s intention to taper and “provide support” to the economy.
  • Some experts believe that tapering could influence Bitcoin in a negative way.
  • The flagship crypto consolidated, while flashing a possible continuation of the uptrend in the upcoming hours.

Yerevan (CoinChapter.com) – Bitcoin continued to consolidate throughout the past week, unable to break the above $50,000 with confidence. Meanwhile, central bankers, policymakers, and academics discussed major macroeconomic policies during the Jackson Hole annual Economic Policy Symposium.

Jerome Powell, the US Federal Reserve (Fed) chair, delivered a speech and confirmed the Fed’s determination to continue tapering monetary policy “for continued progress toward maximum employment.”

Jackson Hole speech

Mr. Powell asserted that his greatest concern throughout the “troubled times” is the sustenance of a healthy job market. He also pointed out that the recovery speed exceeded all expectations.

“As is typically the case, the recovery in employment has lagged that in output; nonetheless, employment gains have also come faster than expected. […] The job monitary policy is to promote maximum employment and price stability as the economy works through this challenging peroid”.

commented the chair.

Mr. Powell pointed out that should higher inflation (currently 4.8%) become a “serious concern,” the FOMC (Federal Open Market Committee) would use appropriate tools to control it. He assured that the Fed and the FOMC are keeping the inflation rates at the expected levels consistent with the government’s goals.

“The Committee remains steadfast in our oft-expressed commitment to support the economy for as long as is needed to achieve a full recovery. The changes we made last year to our Statement on Longer-Run Goals and Monetary Policy Strategy are well suited to address today’s challenges”.

Asserted key note speaker.

Also read: Bitcoin looks bullish as BTC tops $50,000 ahead of Fed’s Jackson Hole meeting.

Bitcoin vs. tapering

The flagship cryptocurrency often comes up as an investment alternative to government bonds. Once the Fed lowers its bond-buying rate (currently $120B per month), the interest rate would consequently rise. With high-interest rates from government bonds, many investors would choose them over the volatile cryptocurrency market.

Although there is no direct correlation between the two, some experts believe Bitcoin doesn’t take too well to tapering. Charlie Morris, the CIO of ByteTree Asset Management firm, commented on the connection.

“Historically, that has been a headwind for bitcoin. In past cycles, both the anticipation and start of tapering have tightened monetary conditions, boosting the dollar in the process.”

said the executive.

Currently, the alpha crypto is putting a green candle on the chart. The upcoming hours will show if BTC makes it out of the sideways price action and manages a break back toward the $50,000 line.

Bitcoin consolidating below $50,000. Source: BTCUSD on TradingView.com
Bitcoin consolidating below $50,000. Source: BTCUSD on TradingView.com

Also read: Bitcoin whales slow down accumulation as BTC trades near $50K; dump ahead?

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