Crypto Market Buoyed by U.S. Federal Reserve Chairman’s Comments
The crypto market received a welcome boost Friday from the U.S. Federal Reserve chair, who signaled that its central bank would not “taper” its stimulus programs right away. The news that the reduction would come later than sooner means there is potentially more liquidity in the market, which bodes well for crypto.
“Economists think that the central bank could begin to slow its bond-buying in November or December, a process that is commonly called tapering,” The New York Times reported. “The anticipated pullback would be the central bank’s first step away from the cheap-money policies it has been using to stoke growth and help the economy to recover from the hit it took at the start of the pandemic.”
The crypto market responded immediately by boosting prices for the top coins. Bitcoin alone rose more than $1,400 in the hour immediately after Powell’s speech, delivered virtually as part of the Kansas City Federal Reserve’s annual symposium held in Jackson Hole, Wyoming.
“Despite comments from more hawkish Fed officials lately, Powell’s remarks remained more dovish, suggesting he was more inclined to wait to see the further progress made in the economy before adjusting policy and tapering asset purchases,” is how a Yahoo!Finance reporter summed up the news.
“At the FOMC’s (Federal Open Market Committee) recent July meeting, I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year,” Powell said. “The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant. We will be carefully assessing incoming data and the evolving risks. Even after our asset purchases end, our elevated holdings of longer-term securities will continue to support accommodative financial conditions.”
Investors in traditional markets sent the S&P Index to an all-time high on the news. Crypto analysts chimed in, celebrating the good news.
“Crypto green, stocks green, I’ll keep the trend going and order an island green from tropical smoothie,” tweeted OnlyBands Teej.
“No news is good news,” quipped CoinDesk in its analysis of Powell’s announcement.
While crypto traders enjoyed Friday’s lift, some wonder if it’s just a blip.
Analysts remain divided on whether the crypto market faces a breakout or a breakdown in the coming weeks. And while the market may continue to fluctuate, adoption of and support for cryptocurrencies continues to increase.
“Ahead of the latest bitcoin and crypto price surge higher, a poll of mostly banking executives found most think bitcoin and digital assets could replace fiat currencies like the U.S. dollar within the next five to 10 years—a shift described as “seismic,” Forbes reported earlier this week, referring to Deloitte’s 2021 Global Blockchain Survey.
The survey polled more than 1,000 senior executives in countries around the globe, including Brazil, China, Germany, Japan, South Africa, the United Kingdom, and the United States. An overwhelming 80% believe that digital assets will be “very/somewhat” important to their organizations in the next two years.
“Participation in the age of digital assets is not an option – it is inevitable,” the Deloitte analysts concluded. “Leaders are left only to decide how and when their organizations should start – and how to use digital assets and the new global financial service infrastructure their greater advantage.”
Joyce Pavia Hanson