In a few hours, the Bitcoin and financial community will be sitting in front of their screens as Fed Chair Jerome Powell speaks at the Jackson Hole symposium at 10:05 a.m. EST. His remarks are expected to impact not only traditional markets like stocks and commodities, but also the volatile areas of bitcoin and crypto.
The environment for Bitcoin and the broader crypto market is far from stable. Last Thursday’s recent crash is still ongoing, casting a shadow of uncertainty. The Jackson Hole event, historically a catalyst for market moves, is likely to bring renewed volatility. The direction of this volatility – bullish or bearish – largely depends on Powell’s tone: hawkish or dovish.
What to expect from Jerome Powell?
A year ago, Powell’s unexpected change in his speech sent shockwaves through the financial ecosystem, causing stocks, bitcoin and other cryptocurrencies to plummet and exacerbating the global bear market. This has many asking, “Are we getting another aggressive surprise?” The prevailing view, however, is that Powell may not drop bombs this time.
JPM’s Market Intelligence department said, “The Fed is strictly data dependent and each pause is characterized as a ‘hawkish jump’ to maintain optionality.”
Bank of America, on the other hand, has its own expectations. The bank expects Powell to reaffirm the Fed’s commitment to its 2 percent inflation target. Despite some progress, Powell is likely to emphasize that there is still work to be done. The bank is therefore forecasting a prolonged period of restrictive policy.
Based on Powell’s comments at the July press conference, where he acknowledged the more balanced risks associated with the impact of Fed policy, Bank of America (BoA) is speculating his tone could change in Jackson Hole. This is especially true given stronger-than-expected second quarter GDP of 2.4% and non-auto retail sales up 1.0%. Given these robust numbers and the potential inflationary pressures they pose, the BoA expects Powell to counter expected rate hikes over the coming year.
Today’s tweet from Walter Bloomberg summed up sentiment: “Fed expected to drill ‘longer and higher’ in Jackson Hole.”
Macro Intelligence 2’s Julian Bridgen commented: specification“They will continue to hold out such a sword of Damocles in the form of possibly another 25 basis point rate hikes while emphasizing they will not cut rates anytime soon.” Brigden’s outlook suggests inflation will remain above target, which is little leaves room for a moderate attitude.
Bitcoin and crypto prepare for Jackson Hole
The multi-million dollar question for Bitcoin and crypto investors is whether Bitcoin, which experienced a downturn after Jackson Hole in 2022, will experience the opposite this year. Keith Alan, Founder of Material Indicators, pulled Pay attention to the patterns observed in Bitcoin price action. “Last year, leading up to Powell’s speech, Bitcoin broke key technical support levels. We’re seeing similar patterns now,” Alan noted.
He highlighted the recent tests and losses of the 21-day, 50-day, 100-day and 200-week moving averages and drew parallels with last year’s behavior. However, Alan urged caution, stating that “the similarities in current price action do not guarantee a repeat of last year.” Since then, core inflation has fallen and Powell’s comments have been more measured. The direction of the market remains uncertain, but it is primed for a significant move.”
Stressing the need for vigilance and preparation, he concluded, “We must be aware of these patterns, but not overreact.” Powell’s words will undeniably have an impact on markets. Proper risk management is essential.”
As the financial world awaits Powell’s speech, the consensus is clear: his words will shape markets, but direction remains to be seen. At press time, bitcoin price has remained unchanged, trading at $26,082.
Bitcoin Floats Above $26,000, 1-Day Chart | Source: BTCUSD on TradingView.com
Featured image of Moguldom, chart from TradingView.com
Source : bitcoinist.com