Fed Chair Powell Leaves Door to Further Rate Hikes Open – Here is How Crypto Markets Reacted
Speaking at an annual conference of central bankers at Jackson Hole, the Chairman of the US Federal Reserve Jerome Powell left the door open to the possibility of further interest rate hikes in the US, triggering some short-lived sell pressure in the crypto market.
Bitcoin (BTC) fell to new daily lows in the $25,800s from earlier session highs at $26,200 in response to Powell’s remarks, though was last trading closer to $26,000, with losses in the last 24 hours at a modest 0.5%.
Ether (ETH) is also down versus its pre-Powell speech levels, but at current levels around $1,650, the cryptocurrency is flat in the last 24 hours.
The picture amongst major altcoins was more mixed, with the likes of BNB (BNB) and XRP (XRP) flat, Polkadot (DOT) and Litecoin (LTC) slightly in the green and Cardano (ADA) and Solana (SOL) slightly in the red.
The move lower in crypto prices comes after US 2-year yields hit their highest level since early July near 5.10% - short-dated US yields are the most sensitive to changes in expectations regarding the Fed’s interest rate plans.
Higher yields on US government debt, which is considered a risk-free asset, encourage investors to sell their holdings of “riskier” assets, such as crypto.
The Fed is prepared to lift interest rates further if needed to address inflation, Powell said at Jackson Hole, though he said the central bank would proceed cautiously.
In any case, the central bank will maintain its restrictive monetary policy stance until US inflation is sustainably slowing, he added.
The Fed lifted benchmark US interest rates to 5.25-5.50% in July, its highest levels in over two decades.
The central bank began raising interest rates aggressively in March 2022 after a surge in US inflation that began in
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