Cryptocurrency News

BTC Slides Below $20,000, ETH Sub $1,500, After Powell’s Comments on Monetary Policy

By August 29, 2022 No Comments
Bitcoin cryptocurrency cover

Key takeaways:

  • Bitcoin and Ethereum dropped below their respective psychological price levels of $20,000 and $1,500 during the weekend
  • Fed Chair’s comments were likely the main reason for the recent sell-off
  • The total crypto market cap shrunk to below $1 trillion

Bitcoin drops to $19k amid a stock market sell-off

Bitcoin lost nearly 10% of its value in the last couple of days, having dropped from $21,750 on Friday to a six-week low of $19,550 today. The significant drop in BTC/USD is very likely linked to the remarks made by Federal Reserve Chair Jerome Powell at the end of last week.

Bitcoin experienced a sharp price decline during the weekend.

Powell’s comments led to a broader market downturn, with both the prices of US equities and crypto assets taking a significant hit. 

Speaking at the Kansas City Fed’s annual policy forum in Jackson Hole, Wyoming, Powell noted that the restrictive monetary policy would likely continue for “some time”, sparking fears among investors that the interest rate hikes could trigger a new recession.

“Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy,” said Powell.

Comments made by Powell are mostly in line with a report published two weeks ago by the Fed, in which the central bank alluded to the possibility that the interest rate hikes would likely continue throughout 2023.

The S&P 500 Index, which typically serves as a good metric when evaluating the health of the US economy, experienced a sharp decline in the wake of Powell’s remarks – the index lost roughly -3.5% before the trading was closed on Friday.

Prices of most digital assets mirrored the happening in the traditional markets. In addition to Bitcoin, Ethereum, BNB, Cardano, and other top market cap crypto assets also lost high single digits/low double digits.