Bitcoin price drops below $63,000 after comments from Fed Chairman Powell

Bitcoin’s value fell below $63,000 overnight. This happened in response to statements by Jerome Powell, the chairman of the US Federal Reserve.

Powell indicated that policymakers do not plan to cut rates anytime soon, tempering expectations of further aggressive rate cuts.

Federal Reserve does not make hasty decisions

Speaking at the National Association for Business Economics, Powell emphasized that the US labor market remains strong while inflation is gradually declining. However, he warned that major rate cuts are unlikely in the short term:

“This is not a committee that is in a hurry to quickly reduce interest rates. We are guided by incoming data.”

Earlier this month, the Fed cut interest rates by 50 basis points for the first time in four years. Many investors saw this as a signal for further cuts, but Powell tempered these expectations. He indicated that there will probably be only two more interest rate cuts this year.

This news caused a drop in the Bitcoin price, which had previously risen 7% after the half-percentage point cut in September. According to Powell, interest rates are expected to be 50 basis points lower by the end of the year than they are now.

Expectations for upcoming interest rate cuts

At the start of the weekend, many investors expected an interest rate cut of 0.5% in October. However, CME Group’s FedWatch Tool now shows a 65% chance of a 25 basis point cut at the next Fed meeting in October. By the end of December, rates could have fallen by a total of 75 basis points, which would bring US yields to a range of 4.00% to 4.25%.

However, Powell reiterated that the Federal Reserve will continue to rely on economic data and reassess every month:

“If the economy slows down more than we expect, we can cut more quickly. If it slows down less, we can lower slower. We will act based on what is necessary.”