Only one rate cut this year? Powell puts the “Eagle” again, BTC gives back its gains

In early trading on Wednesday, the May Consumer Price Index (CPI) released by the U.S. Department of Labor was lower than expected. The crypto market soared and the price of Bitcoin rebounded to more than $70,000. However, after the Federal Reserve kept interest rates unchanged and hinted that this year may only After one interest rate cut, the rally quickly fell back. At press time, Bitcoin was trading at $68,250, up 1.5% in 24 hours.

Altcoins performed positively, with most of the top 200 coins by market capitalization seeing price increases.

Newer DePIN token Io.net (IO) was the top performer, up 35%, followed by Livepeer (LPT), up 19.3%, and Injective (INJ), up 12.6%. Akash Network (AKT) was the biggest loser, down 10.5%, FLOKI (FLOKI) fell 7.9%, and MANTRA (OM) fell 5.3%.

The current overall market value of cryptocurrency is US$2.48 trillion, and Bitcoin’s market share is 54.1%.

The U.S. stock market ignored Powell's remarks. As of Wednesday's close, the Dow initially closed down 30 points or 0.09%, the S&P 500 rose 0.85%, and the Nasdaq rose 1.53%. The latter two closed at record highs for three consecutive trading days. new highs. Nvidia (NVDA.O) closed up 3.5%, and Apple (AAPL.O) rose 2.86%. It once regained the title of the world's largest market capitalization during the session.

Only one interest rate cut this year? Powell's speech was "hawkish"

The Federal Reserve continued to maintain interest rates at the current range of 5.25% to 5.5% today, but lowered its interest rate cut expectations to only one rate cut in 2024. Policymakers noted that "further progress" had been made toward the 2% inflation target.

However, Federal Reserve Chairman Jerome Powell pointed out at a press conference that although inflation has fallen from its peak level, there is currently no confidence to cut interest rates, let alone announce an interest rate cut. date stage.

Powell said: "We think today's (CPI) report has made progress and increased confidence. But we do not think we are confident enough to start easing policy yet."

Powell also He believes the Fed's restrictive stance on monetary policy is having the desired effect on inflation, but added that central bankers are still waiting to see enough progress.

Powell said: "We will know over time whether it is restrictive enough. But I think for the reasons I talked about at the last press conference and elsewhere, I I think the evidence is very clear that the policy is restrictive and is having the effect we hope for.”

In addition, most Fed officials are in no rush to cut interest rates. Former Fed official Laurence Meyer said: "The CPI data is good, and I think the Fed may cut interest rates in September. Because they will have three monthly economic reports before the meeting in mid-September."

Some analysts said , given the tame CPI, today's Fed forecast looks a bit outdated, but this may also reflect its reluctance to change forecasts based on one data. Powell also said in his speech that the inflation outlook provided by the Fed is "a fairly conservative forecast" that may not be confirmed by future data and may be revised.

Analyst: Bitcoin may consolidate near current levels or rise modestly

Bitfinex analysts said the decision to keep interest rates steady shows that the Fed remains cautious about inflation, as the Fed needs to balance Inflation control and economic stability.

Analysts pointed out: “Historically, both interest rate cuts and decisions to keep interest rates unchanged have a significant impact on asset flows and market prices. For example, past interest rate cut decisions have typically led to increases in asset prices and ETF funding. Inflows, as has been the case in the gold market. A similar situation has occurred in the cryptocurrency market. The last eight CPI and FOMC events have resulted in increased volatility, at least on an intraday or weekly basis. However, this has not been the case since March. This increase in volatility is short-lived.”

Despite the Fed’s decision to keep interest rates stable, the global trend is to cut interest rates, and it is only a matter of time before the U.S. central bank cuts interest rates.

Analysts wrote: "Central banks around the world have begun to cut interest rates, indicating that the trend of monetary easing is expanding. It is clear that the Bank of England and the Federal Reserve will follow suit in the coming months. The global liquidity cycle shows that the currency Supply is likely to increase, which could support asset prices including cryptocurrencies."

Volatility in crypto markets is likely to increase in the short term. Analysts said: “With the Federal Reserve’s decision to maintain current interest rates, Bitcoin (BTC) may experience short-term volatility as the market adjusts to the news. However, the overall trend is likely to remain positive, especially if the overall economic outlook continues to improve. ”

They noted: “Historically, three of the past four CPI data have also resulted in local highs for Bitcoin prices, suggesting that such announcements may bring volatility as investors react to this year. Still optimistic about a later rate cut, Bitcoin could consolidate around current levels or post a modest rally.”

Ionic Digital CEO Matt Prusak said: “As the Fed attempts to achieve a soft landing, any material decline in Bitcoin could lead to attractive accumulation opportunities for long-term investors.”

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