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Fed Chair Powell Hints at Softer Monetary Policy, Bitcoin Back to $106K

Published by
Mustafa Mulla

The world’s largest cryptocurrency, Bitcoin, has jumped back to $106k today after dipping to some of its weekend losses around $103k. The surge comes right after as the Federal Reserve hints at a possible change in its strict money policy later this year.

Therefore, traders are bullish on the bitcoin surge. 

Powell Hints at Softer Money Policy

Speaking at an event for the Fed’s International Finance (IF) Division, Powell said their work helps understand the world’s economy and all the risks. He didn’t mention interest rates directly, but he did say that global data matters a lot now..

Powell’s comments didn’t go unnoticed. Investors saw them as a quiet sign that the Fed is starting to think about changing its current tight money approach if economic trends keep heading in the right direction.

Why This Could Be Good News for Bitcoin

This talk of a softer policy shift is good news for Bitcoin and other riskier assets. Eventually, the inflation is slowing down, and jobs are steady. Currently, inflation is at 2.3%, close to the Fed’s 2% goal. 

Meanwhile, the Unemployment rate is also around 4.2%, showing that people are still working and the economy is okay.

Even though Powell didn’t say there will be cuts soon, he said that global data is very important. Traders think this could mean the Fed might lower rates later if inflation keeps falling and jobs stay strong. 

Lower rates make it easier to borrow money, which usually helps things like Bitcoin go up.

Cautious Approach, But Market’s Ready

For now, the Fed is being careful. Most traders think rates will stay steady at the June meeting. The CME FedWatch Tool shows a 95.3% chance of no change in rates next month. Only a small chance of a cut is expected.

This careful but open approach has traders hopeful that Bitcoin and other cryptos will see more gains soon.

As of now, Bitcoin is trading around $105,253, reflecting a slight drop seen in the last 24 hours. 

FAQs

What is the Fed’s current stance on rate cuts?

The Fed remains cautious, with no immediate cuts expected, but traders see potential easing later if inflation keeps falling.

How does the Federal Reserve’s policy affect Bitcoin?

When the Fed signals lower interest rates or a softer monetary stance, it often boosts investor confidence in riskier assets like Bitcoin.

How might future Fed decisions impact Bitcoin’s trajectory?

If the Fed adopts a more dovish stance, it could further enhance Bitcoin’s appeal as an alternative investment, potentially driving prices higher.

Mustafa Mulla

Mustafa has been writing about Blockchain and crypto since many years. He has previous trading experience and has been working in the Fintech industry since 2017.

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