An Evolving Job Market and a Slowing Economy
On December 13, 2023, Jerome Powell captured global attention during his press conference. He discussed the current situation and outlook of the United States’ monetary policy. The Fed, committed to controlling high inflation, is considering strategies to maintain the inflation target at 2%.
The job market, though tense, shows signs of balance. Economic growth is slowing down, reflecting the impact of current monetary policies.
Critical Decisions for the Economy
The Fed does not rule out future interest rate increases, depending on economic developments and potential risks. It aims to balance the fight against inflation and the stimulation of economic growth.
The Specter of Recession and the Fed’s Adaptability
While recession is not an immediate reality, Powell acknowledges its potential for next year, highlighting global economic uncertainty and the need for flexible monetary policy.
Towards a Cautious but Determined Future
Powell’s speech marks a turning point in the management of American monetary policy. The Fed navigates a complex economic context, seeking to reduce inflation while anticipating future challenges.
The Impact on Cryptocurrencies
The cryptocurrency markets’ reaction to Powell’s speech was significant. Bitcoin and other cryptocurrencies remained volatile but mostly positive. Bitcoin saw a 3% price increase, exceeding $17,000, with a weekly gain of 6.79%.
Powell’s announcement of a potential moderate interest rate hike has bolstered investor confidence. This positive outlook on inflation and unemployment has supported the bullish trend of BTC, in parallel with the S&P 500 index.
The Correlation between Monetary Policy and Bitcoin
Monetary policy has become a key factor for Bitcoin, bringing it closer to traditional financial markets. The Fed’s decisions on interest rates and unemployment figures significantly influence BTC prices.
If the Fed funds rates remain between 4% and 5% by the end of the year, BTC could see an optimistic start to the new year. The analysis of Bitcoin’s Market Value to Realized Value (MVRV) offers insights into the market bottom, indicating potential times for buying or selling.
Resilience and Maturity of the Cryptocurrency Market
Although the cryptocurrency market reacted negatively after Powell’s speech, the impact was less significant than before, showing resilience and increasing maturity of the market in response to fluctuations in global monetary and economic policies.
