Bitcoin and Ethereum slipped Friday as investors await the Fed's inflation message at the annual Jackson Hole Conference Friday.
The prices of crypto bigwigs Bitcoin and Ethereum are in the red as markets brace for the speech of Fed chair Jerome Powell at the Jackson Hole Conference Friday. While opinions about the Fed’s stance today remain divided, many analysts believe Powell will reiterate the bank’s hawkish position and its commitment to using everything it can to bring down the record-high inflation.
Equities and Crypto Continue Feeling Inflationary Pressures While Dollar Strengthens
The crypto market is down today as investors await the Fed’s chair 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 equities have been under serious inflationary pressure as the U.S. central bank’s hawkish monetary policy and aggressive interest rate hikes continue to push many investors away from risk assets. On the other hand, the current macro environment has boded well for bond yields and the US dollar, which flipped 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 greenback, which has hit a 20-year high earlier this year. Equities, which have been increasingly correlated with crypto prices, are also down ahead of Powell’s speech, with S&P 500 and Dow Jones futures down 0.4% and 0.3%, respectively.
The crypto market drawdown this year has been exacerbated by significant headwinds within the industry, such as the crash of the 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).
Market Divided on Fed’s Stance but Analysts Expect Fed to Stick to its Guns
Many investors are hoping that today’s Jackson Hole Conference will bring a more dovish message by the Fed and Powell, but some are convinced that the central bank will not back down just yet.
According to CNBC, numerous analysts think that the Fed will continue using all the available firepower to bring down the 4-decade high inflation. Moreover, even if the Fed is considering stopping increasing interest rates, it is more likely to keep them where they are rather than introduce rate cuts before 2023.
The latest consumer price index (CPI) print 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. Even though inflation may have peaked, U.S. Treasury Secretary Janet Yellen warned last month that consumer prices in the U.S. are “unacceptably high” and bringing them down will be Washington’s “top priority.”