No Rate Cuts? Powell Words Sink Bitcoin

- Bitcoin Price Drops 2.79% After Fed Chair Powell's Remarks 'The economy shows no urgency for rate cuts.' - The U.S. Producer Price Index (PPI) for October rose 2.4% year-over-year, indicating that inflation remains largely in line with expectations, reducing the necessity for interest rate adjustments [Unblock Media] Recently, the price of Bitcoin experienced significant volatility following statements made by Jerome Powell, the Chair of the Federal Reserve. Powell expressed a skeptical view regarding the possibility of a December interest rate cut. During a speech in Dallas, Texas, Powell stated, "The economy isn't sending signals that suggest a need to rush into rate cuts." These remarks came after rate cuts of 50 basis points and 25 basis points in September and November, respectively, with the next Federal Reserve rate decision scheduled for December 18th. Following Powell's remarks, the price of Bitcoin dropped approximately 2.79% to $86,979. It later slightly recovered to reach $88,100. Many investors quickly moved to sell after Powell's comments due to the lack of a clear signal for rate cuts. The central bank's rate decisions heavily impact Bitcoin prices. When interest rates are cut, the attractiveness of safe assets like bonds and deposits decreases, leading investors to turn to riskier assets such as Bitcoin. This shift can undermine market confidence, causing a drop in Bitcoin's price. Additionally, the US Producer Price Index (PPI) for October rose 2.4% annually, slightly above the market forecast of 2.3%. This indicates that inflation is in line with expectations, reducing the need for the Fed to adjust interest rates. An increase in the PPI beyond expectations implies higher manufacturing costs, which companies may pass on to consumers, potentially leading to increased inflation. Concerns about the impact of various policies from President Donald Trump on economic growth and inflation are also significant. Economist Nouriel Roubini told ABC News that some of Trump's pro-business policies could boost growth and inflation. However, he warned that tariffs, trade wars, and immigration policies could lead to higher rates. If Roubini’s predictions are correct, and Trump's policies drive economic growth and inflation, the likelihood of the central bank raising rates increases, diminishing Bitcoin's appeal. In conclusion, the Federal Reserve's interest rate policies and various factors within the US economy significantly influence the Bitcoin market. Powell's rate cut skepticism has put short-term pressure on Bitcoin prices, but existing interest rates and inflation data do not yet provide a clear market direction.