Bitcoin and Wall Street Plunge as Powell Threatens to Hike Interest Rates at FOMC

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Bitcoin price turned turbulent during a news conference following today’s highly anticipated Federal Open Markets Committee (FOMC) meeting. It fell $1,000 when Federal Reserve Chairman Jerome Powell reaffirmed his intention to raise the federal funds rate in March.

In his speech ahead of the conference, Powell acknowledged that much of the workforce is unable to report to work, given the current circumstances. However, he expects the effects of the Omicron wave to be brief, alongside its negative economic effects. The president noted that inflation is well above the Federal Reserve’s 2% target rate, blaming supply and demand imbalances. Earlier this month, the December CPI hit a record high of 7%, pushing the price of Bitcoin higher. Citing a tight labor market, Powell concluded that the economy no longer needed sustained support from monetary policy. Thus, the Fed’s rate hike and balance sheet reduction plans in March remain in effect. The Fed will move from very dovish to significantly less dovish, to not dovish, over time, Powell said. Earlier today, BitMEX co-founder Arthur Hayes speculated that the Federal Reserve was bluffing and couldn’t raise rates without hurting the market. Powell disagreed, however, saying there was plenty of room to raise rates. Crypto and stock markets fell after the speech. Bitcoin has fallen from over $38,200 at 2:40 PM EST to under $37,000 at the time of writing. Meanwhile, the NASDAQ and S&P 500 are down 0.5% on the day. Bitcoin/USD. Source: TradingView SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to sign up and receive $100 free and 10% off Binance Futures fees for the first month (terms).

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