Crypto Markets Dip After Fed Chair’s Remarks
Cryptocurrency markets experienced a slight decline on Wednesday after Federal Reserve Chairman Jerome Powell suggested that a 25-point rate cut in October might be the last one until 2025. The value of Ethereum, the second-largest cryptocurrency, dropped around 2%, landing just above $3,900. Overall, the entire cryptocurrency market saw a decline of about 1.8%.
Powell noted that opinions among his colleagues on future rate cuts vary significantly. He remarked, “There are growing voices saying that we should wait at least one cycle,” during a press conference.
The S&P 500 remained nearly unchanged by the end of Wednesday, with the Dow Jones falling about 0.2% and the Nasdaq rising close to 0.6%.
Despite the market fluctuations, some crypto analysts maintain a cautiously optimistic stance. Alex Bloom, founder and CEO of the crypto asset management firm Two Prime, stated in an email, “Easy financial conditions are supporting the upward momentum of BTC price. Unless the macroeconomic outlook creates serious unforeseen challenges, things could remain stable.”
Wednesday’s drop in cryptocurrency values was minor compared to a significant market crash on October 10, which saw over $19 billion in crypto positions liquidated, marking one of the largest such events monitored by crypto analytics firm Coinglass. This crash occurred shortly after President Donald Trump threatened to impose additional tariffs on China, which led to Bitcoin’s market capitalization shrinking by over $200 million and a nearly 10% price drop. Ethereum experienced an even steeper decline of almost 14%.
Just days following the crash, Trump reassured the public, stating, “Don’t worry about China, everything will be fine!” on his social media platform. He added that “The US wants to help China, not hurt it!!!”
Since that time, the market, including cryptocurrency prices, has stabilized, with traders now anxiously awaiting the results of a scheduled meeting between Trump and Chinese President Xi Jinping. Since October 10, Bitcoin’s price has hovered around $110,000, while Ethereum has been steady around $4,000.
Thomas Perfumo, a global economist at the cryptocurrency exchange Kraken, mentioned in an email that the evolving macroeconomic landscape is a significant influence on the current cryptocurrency cycle. He added, “While markets are stabilizing after the October 10 liquidation event, this ‘reset’ has certainly lowered short-term risk tolerance.”
