Why Bitcoin, Ethereum, and Dogecoin Are Heading Lower Today Despite Powell's 'Very Very Good' Remarks On Inflation

Major cryptocurrencies experienced a significant decrease in value on Wednesday evening, following hawkish remarks made by Fed Chair Jerome Powell during a press conference. 

Bitcoin, Ethereum, Dogecoin Price Today

The Federal Reserve decided to maintain its current monetary policy on Wednesday, keeping the range for its benchmark interest rate unchanged at 5.25% to 5.50%.

Furthermore, Fed officials have revised their projections for next year, indicating a higher expected interest rate of around 5.1%, compared to the previous estimate of 4.3% in June. This increase reflects their anticipation of stronger economic growth. They now expect a 2.1% real GDP increase for this year, as opposed to the 1% forecasted in June.

Powell, expressed that a majority of committee members view another rate hike as appropriate during the remaining two Federal Open Market Committee (FOMC) meetings, to align with the Fed’s objectives. Powell also noted that recent inflation trends have been encouraging, describing the last three months’ readings as “very, very good.”

The next FOMC policy meeting is scheduled to take place in early November.

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Currently, the global crypto market capitalization stands at $1.07 trillion, a 0.51% decrease in the last day.

Stocks slipped on Wednesday following the announcement from the Federal Reserve that it would keep interest rates unchanged for now while hinting at a potential future increase. The S&P 500 experienced a decline of 0.94% to close at 4,402.20, while the Nasdaq Composite slid 1.53% to 13,469.13. Notably, Microsoft’s MSFT stock decreased by over 2%, while Nvidia NVDA and Google-parent Alphabet GOOGL both saw approximately 3% declines.

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Analyst Notes

According to crypto analyst Michael Van de Poppe, it is unlikely that the FED will raise interest rates. He predicts that the current hiking policy may come to an end.

"Bitcoin is likely to start trending up from here (yes, a fakeout usually happens at the news)."

In another post, he said Bitcoin holds a crucial level at $26,700-26,800 and rallies further. "This is strong and looks like we’ve got a continuation of the uptrend here. New range established, new uptrend, new altcoins breaking out."

Crypto analyst Benjamin Cowen said there is a possibility that Ethereum dominance may decrease over the next few months. 

"Maybe it follows the pattern of BTC dominance. Namely, lower highs (which everyone loves to point out), but also higher lows," he tweeted.

Data from Santiment, an on-chain analytics firm, reveals that the Federal Reserve has decided to maintain interest rates at the recent FOMC meeting. However, they have indicated a possibility of future rate hikes. In the midst of this, the crypto market has remained resilient, despite the S&P 500 dropping to a 4-week low. This break in correlation is a promising sign. Bitcoin traders are showing an aggressive increase in short positions on both Deribit and Binance, leading to the likelihood of potential liquidations that could boost prices. Since the surge in shorting activity last week, BTC’s price has already increased by 4%. This trend is likely to continue.

Photo by Wit Olszewski on Shutterstock

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