Crypto Prices Bullish Once More - What’s Fueling the Recovery?
Prices of major cryptocurrencies are again looking bullish, as traders eye hope that inflation has peaked, and attention shifts to the next US interest rate announcement.
The bullish price action in bitcoin (BTC), ethereum (ETH) and other major coins today came despite a more hawkish tone than expected from Federal Reserve chair Jerome Powell during his press conference on Wednesday this week:
“It is very premature to be thinking about pausing. People when they hear ‘lags’ think about a pause. It is very premature, in my view, to think about or be talking about pausing our rate hikes. We have a ways to go,” Powell said at the time.
That compared to the written Fed statement, which was interpreted by most observers as being more dovish than before, leaving traders somewhat confused about the Fed’s messaging.
Among other things, the statement said the Fed “will take into account the cumulative tightening of monetary policy,” as well as “the lags with which monetary policy affects economic activity and inflation” when it decides on its next step.
The Fed’s next interest rate announcement is expected on December 14.
And while the comments from Powell were enough to send bitcoin and the broader crypto market lower on Wednesday, things started to return to cautious optimism again on Thursday and Friday, when bitcoin posted gains.
In addition to the Fed statement, crypto markets are also supported by a sense that the worst could be over for inflation. That, in turn, is believed to be necessary for the Fed to pause its rate hikes, and eventually start cutting again.
As is widely known by know, bitcoin and crypto in general tends to follow stocks and their ‘risk-on’ and ‘risk-off’ sentiment. Unsurprisingly, a pause in rate hikes would
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