Bitcoin (BTC) fell beneath the $21,000 mark once again after the largest cryptocurrency by market capitalization had been stuck within the $21k range since the week’s start.
As the cryptocurrency market tumbled under selling pressure, likewise, altcoins fell. The majority of altcoins recorded losses of between 3% and 10%. Solana (SOL), Avalanche (AVAX), and Uniswap (UNI) are down by more than 6%. Meme coins, such as Shiba Inu and Dogecoin, are also down nearly 5%.
Ethereum was down 7.43% at $1543 at the time of publication. According to Santiment, Ethereum is currently showing a heightened correlation with the S&P 500. Stocks tumbled while yields across the US Treasury curve climbed as markets digested what higher-for-longer rates might mean for this year and next, as indicated by Fed’s chair Powell speech in Jackson Hole.
This Is the Reason for the Market’s Drop
The annual meeting of the Federal Reserve Bank of Kansas City is ongoing in Jackson Hole, Wyoming. The message from Federal Reserve Chair Jerome Powell to investors was succinct and direct: The central bank is likely to keep raising interest rates and keep them high for a while to fight inflation.
In a less than 10-minute speech, Powell warned that “restoring price stability will likely involve keeping a restrictive policy stance for some time” at the Kansas City Fed’s annual policy symposium in Jackson Hole, Wyoming. The historical evidence advises against hasty policy easing, he continued.
The market’s response was clear: “This was a pushback on market expectations of a turn from the Fed in 2023,” leading to a risk-off mode in the markets as investors digested what higher-for-longer rates might mean for this year and next.
After raising its benchmark rate by three-quarters of a percentage point at each of its previous two policy meetings, investors continue to watch out for any hints about how the US central bank is thinking about the pace of interest rate increases leading up to its September 20–21 policy meeting.
At press time, Bitcoin was trading down 3.58% at $20,692.