Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policies before making any financial decisions.
Crypto bigwigs Bitcoin (BTC) and Ethereum (ETC) are in lower prices as markets prepare for Fed Chair Jerome Powell’s speech at the Jackson Hole Conference on Friday. While opinion remains divided on the Fed’s stance today, many analysts believe Powell will reiterate the bank’s hawkish stance and commitment to doing whatever it takes to bring down record-high inflation.
Stocks and crypto continue to feel inflationary pressures as the dollar strengthens
The crypto market is bottomed today as investors await Fed Chair Jerome Powell’s speech today at the annual Jackson Hole Symposium, which is expected to focus on inflation. Bitcoin and Ether are down nearly 1% and 3%, respectively.
Cryptocurrencies and equities have faced serious inflationary pressures as the US Federal Reserve’s tightening monetary policy and aggressive rate hikes continue to discourage many investors from risky assets. On the other hand, the current macro environment bodes well for bond yields and the US dollar, which flipped the euro earlier this week just a month after the pair hit parity for the first time in 20 years.
Bitcoin and other cryptocurrencies tend to move in the opposite direction to the greenback, which hit a 20-year high earlier this year. Stocks, which have become increasingly correlated with crypto prices, are also down ahead of Powell’s speech, with the S&P 500 and Dow Jones futures down 0.4% and 0.3%, respectively.
The crypto market decline this year has been exacerbated by significant headwinds within the industry, such as the crash of algorithmic stablecoin TerraUSD (UST) and LUNA. These challenges have led to the collapse of many major crypto firms, including Celsius Network, Voyager Digital, and Three Arrows Capital (3AC).
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The market is divided on the Fed’s stance, but analysts expect the Fed to stand by its courses
Many investors are hoping that today’s Jackson Hole conference will deliver a more dovish message from the Fed and Powells, but some are convinced the central bank is not backing down just yet.
According to CNBC, numerous analysts believe the Fed will continue to use all available firepower to bring down the high inflation of the last 4 decades. Furthermore, even if the Fed considers halting rate hikes, the Fed is more likely to leave them where they are than to introduce rate cuts before 2023.
The latest Consumer Price Index (CPI) printout showed that inflation fell to 8.5% in July from 9.1% in June after the Fed implemented two consecutive hikes of 75 basis points (bps). Although inflation may have peaked, US Treasury Secretary Janet Yellen warned last month that US consumer prices are “unacceptably high” and lowering them will be Washington’s “top priority”.
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About the author
Tim Fries is co-founder of The Tokenist. He has a B.Sc. in mechanical engineering from the University of Michigan and an MBA from the University of Chicago Booth School of Business. Tim was a senior associate on the investment team of RW Baird’s US private equity practice and is also a co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
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