and other cryptocurrencies were slightly lower on Friday as investors awaited a key speech from Federal Reserve Chairman Jerome Powell.
With the market expects a hawkish stance from the U.S. central bank chief, one analyst is eyeing a relief rally.
The price of Bitcoin fell 1% over the past 24 hours to $21,400. A plunge last week brought the largest digital asset tumbling down from $24,000—its highest levels since a dramatic selloff in mid-June—to a recent bottom of $20,800, from which it has been inching higher all week.
Given its significant correlation to equities and macroeconomic policy, Bitcoin is likely to lead cryptos in reacting to Powell’s speech at the Jackson Hole economic conference later Friday. The speech will be closely monitored for clarity on the central bank’s future monetary policy pathway, including whether the Fed will continue tightening policy into next year or begin easing off in 2023.
Fighting the hottest inflation in 40 years, the Fed has already embarked on the biggest interest-rate hikes in decades in an effort to tame rising prices, which dents demand for risky bets like Bitcoin and also raises the prospect of a recession.
“Too dovish a statement cannot be expected from the chair,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank, expressing a view widely shared by analysts that Powell likely will strike a hawkish tone expressing a commitment to fight inflation with tighter financial conditions. And that narrative may be largely priced in at this point.
“But Bitcoin could show a mild relief rally after the speech,” said Hasegawa. “All the bad news and surprises from the symposium will be all behind.”
the second-largest digital asset, lost more than 2% to below $1,700. Smaller cryptos or altcoins were more mixed, with
jumping 3% while
shed 3%. Memecoins—which were initially intended as internet jokes—were slightly more buoyant, with both
eking out gains.
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