Bitcoin falls after Jerome Powell's statements

The Federal Reserve maintains high rates, strengthens the dollar and weakens risk assets. Is the crypto market in danger?

The price of Bitcoin fell 2.56% this Tuesday, reaching $94,938, after Jerome Powell, president of the Federal Reserve, indicated that there is no rush to cut interest rates. This decision strengthens the dollar and weakens risk assets, including cryptocurrencies.

The leading cryptocurrency was rejected by the 50-period moving average, sending a short-term bearish signal / Tradingview

Powell's statements impact the crypto market

Jerome Powell, in his speech before the Senate Banking Committee, stated that the US economy remains "strong overall", with low unemployment and inflation above the 2% target. This led the Fed to keep interest rates high in the short term, a decision that has had an immediate impact on the cryptocurrency market. Last December the Fed kept rates at 4.50%.

Bitcoin in free fall after Jerome Powell's responses

At the time of writing, Bitcoin was down 2.56%, standing at $94,938. The leading cryptocurrency was rejected by the 50-period moving average, sending a bearish signal in the short term. However, it is still holding above the key support of the 100-period moving average, located at $93,400. If it consolidates below the EMA50, it sends warning signals of a deeper correction.

The dollar strengthens, cryptocurrencies weaken

Maintaining high interest rates strengthens the dollar and weakens risk assets, such as cryptocurrencies. Bitcoin, which maintains a high correlation with the Russell 2000 index, was no exception. In addition, trading volume was well below the 25-day average, showing a market with little participation from buyers.

Market expectations

Participants in the Fed funds futures market are betting 95.5% that the Fed will keep rates at 4.50% in its next announcement, scheduled for 35 days from now. Initially, a rate cut was expected in June, but now there is a 50.8% chance that this will happen in July. So a Bitcoin rally due to a weaker dollar could be canceled out.

Ripple effect in the crypto market

The rest of the cryptocurrencies also suffered significant losses. Ethereum fell 2.63%, while the total market capitalization of altcoins (excluding ETH) fell by $15.89 billion, standing at $1.19 trillion.

Capital flows into Bitcoin ETFs

Last week, Bitcoin ETFs saw a positive capital flow of $203.8 million, according to data from Coinglass. The above shows a slowdown in the capital entering the ecosystem of the world's leading cryptocurrency. However, this Monday the net flow was negative, with outflows of $186.30 million, reflecting investor caution in the face of market uncertainty.

As long as the Fed maintains its high-rate stance, the crypto market could continue to face downward pressures. Investors should keep an eye on the Fed's next moves and key Bitcoin supports to make informed decisions.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial or investment advice. Please do your research and consult with a professional before making any financial decisions.