Bitcoin and Ethereum fall as markets await Powell’s Jackson Hole speech

The prices of crypto giants Bitcoin (BTC) and Ethereum (ETC) are in the red as markets prepare for Fed Chair Jerome Powell’s speech at the Jackson Hole conference on Friday. While opinion on the Fed’s stance remains divided today, many analysts believe Powell will reiterate the bank’s hawkish stance and its commitment to use everything it can to bring down record inflation.

Stocks and crypto continue to feel inflationary pressures as the dollar strengthens

The crypto market is down today as investors await Fed Chairman Jerome Powell’s speech at the annual Jackson Hole Symposium later today, which is expected to focus on inflation. Bitcoin and Ether are down almost 1% and 3% respectively.

Cryptocurrencies and stocks have been under severe inflationary pressure as the US Federal Reserve’s hawkish monetary policy and aggressive rate hikes continue to push many investors away from risk assets. On the other hand, the current macro environment bodes well for bond yields and the US dollar, which reversed the euro earlier this week, just a month after the pair reached parity for the first time in 20 years.

Bitcoin and other cryptocurrencies tend to move in the opposite direction to the dollar, which hit a 20-year high earlier this year. Stocks, which have become increasingly correlated with cryptocurrencies, are also down ahead of Powell’s speech, with the S&P 500 and Dow Jones futures down 0.4% and 0.3%, respectively.

The decline in the crypto market this year has been exacerbated by significant industry headwinds, such as the crash of algorithmic stablecoin TerraUSD (UST) and LUNA. These challenges have resulted in the collapse of many major crypto firms, including Celsius Network, Voyager Digital, and Three Arrows Capital (3AC).

Join our Telegram group and never miss a story about digital values.

The market is divided on the Fed’s stance, but analysts expect the Fed to stick to its guns

Many investors hope that today’s Jackson Hole conference will bring a more dovish message from the Fed and Powell, but some are convinced that the central bank will not withdraw just yet.

According to CNBC, many analysts believe the Fed will continue to use all available firepower to bring down the 4-decade high inflation. Also, even if the Fed considers stopping raising rates, it is more likely to keep them where they are rather than cut rates before 2023.

The latest printout of the consumer price index (CPI) showed that inflation eased to 8.5% in July from 9.1% in June after the Fed implemented two consecutive 75 basis point (bps) hikes. Although inflation may have peaked, US Treasury Secretary Janet Yellen warned last month that US consumer prices are “unacceptably high” and bringing them down will be Washington’s “top priority”.

What are your expectations for Powell’s speech in Jackson Hole today? Let us know in the comments below.

About the author

Tim Fries is the co-founder of The Tokenist. He has a B. Sc. in mechanical engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate in the investment team at RW Baird’s US Private Equity division and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.