Bitcoin Surges Above $22K as Powell Softens Tone on Day 2 of Testimony
• Jerome Powell, the Chairman of the U.S. Federal Reserve, testified before Congress that no decision has yet been made on the size of a potential rate hike in March.
• Markets interpreted Powell’s comments as suggesting an imminent 50 basis point increase at the FOMC meeting.
• Analysts discussed the implications of Powell’s speech for the crypto markets and Consensus 2023.
Powell Testifies Before Congress
U.S. Federal Reserve chairman Jerome Powell delivered his semi-annual monetary policy report on Wednesday to members of the House Financial Services Committee, where he “stressed” that no decision has yet been made on the size of a possible rate hike when the FOMC meets later in March. His remarks were notably different from his testimony before Senate on Tuesday which seemed to imply an imminent rate hike of 50 basis points at the committee’s upcoming meeting.
Crypto Markets React to Powell’s Speech
The crypto markets reacted positively to Powell’s softer tone with Bitcoin climbing above $22K following his testimony. Analysts discussed the implications of his speech for both crypto markets and Consensus 2023, with Galaxy head Alex Thorn offering insights into “Bitcoin and Inflation: It’s Complicated”.
Tuesday Market Interpretation
When it came to Tuesday’s prepared remarks, markets interpreted them as suggesting an imminent 50 basis point increase when the FOMC convenes in March. This interpretation was based largely off of words such as “substantial” and “significant” used by Powell throughout his address which implied a larger than usual rate hike was being considered by central bankers .
Wednesday’s Clarification
However, during Wednesday’s testimony, Powell clarified that no decision had yet been made and that there was still debate amongst members over how much rates should be hiked if at all come March time – setting aside much of market speculation leading up to this week’s congressional hearings regarding Fed policies concerning inflation targets and future interest rates hikes .
Final Thoughts
Overall, it appears that while investors initially interpreted Tuesday’s testimony as suggesting a more aggressive stance towards raising interest rates, Wednesday saw Chairman Powell clarify things further by stressing no decisions had yet been made – leaving room for further debate between now and when the FOMC meets later in March regarding what shape their future monetary policies will take .