FED Chairman Jerome Powell Talked About Bitcoin (BTC), Sales Increased! Here Are the Details…

On the night of December 18, 2024, the Federal Reserve (FED) made its final interest rate decision for the year, cutting rates by 25 basis points, a move that was widely anticipated. However, comments from FED Chairman Jerome Powell sparked significant volatility in the cryptocurrency market, particularly affecting Bitcoin (BTC) and several altcoins.

Bitcoin's Reaction to Powell's Hawkish Stance

Despite the rate cut, Powell’s hawkish comments led to a sudden dip in Bitcoin and other cryptocurrencies. Following the FED's decision, Bitcoin fell below $100,000 but quickly rebounded to rise above that level in the early hours of the Asian trading session. At the time of writing, BTC is trading at approximately $101,395.

Altcoins also took a hit, with notable declines in coins like XRP, Dogecoin (DOGE), and Solana (SOL), which saw drops of up to 5.5%. In comparison, Binance Coin (BNB) and Ethereum (ETH) experienced relatively smaller declines.

Powell's Bitcoin Statements: A Key Trigger for the Drop?

The initial declines in Bitcoin and altcoins were largely attributed to Powell's remarks, particularly his response to a question about whether he would support a Bitcoin reserve, as proposed by former President Donald Trump. Powell stated that the FED does not intend to participate in any government initiatives to create a strategic Bitcoin reserve and emphasized that such decisions should be left to Congress, not the Federal Reserve. He also made it clear that the FED has no plans to amend current laws governing its activities regarding Bitcoin.

This rejection of a Bitcoin reserve, coupled with Powell's caution about inflation continuing to be a concern, sent ripples through the crypto market. Following his comments, the prices of Bitcoin and altcoins started to decline, and a wave of leveraged liquidations hit the market.

Massive Liquidations Hit the Market

According to data from Coinglass, approximately $780 million in leveraged positions were liquidated within 24 hours following Powell’s statements. Of this, $659 million came from long positions, while $120 million was from short positions. A total of 269,507 investors were affected, with the largest liquidation event being an ETH/USDT trade worth $7.10 million on Binance.

Analyzing Powell’s Impact on Bitcoin and the Crypto Market

Nick Ruck, an analyst from LVRG Research, pointed out that although an interest rate cut would typically be seen as a bullish catalyst for Bitcoin and the broader cryptocurrency market, Powell's hawkish remarks dampened market sentiment. Ruck noted that Powell's statement about ongoing inflation concerns and the FED's refusal to support a Bitcoin reserve were major contributors to the recent decline in prices.

Ruck also commented on the broader implications of Powell's stance. He highlighted that Trump’s promise of a strategic Bitcoin reserve was a key factor behind the recent rally in Bitcoin and the cryptocurrency market, which had seen all-time highs in recent months. With the possibility of a U.S. Bitcoin reserve is now off the table, the analyst suggested that Bitcoin and cryptocurrencies may have reached their peak for the time being.

Conclusion

While the FED's rate cut would normally be seen as a positive for Bitcoin, Powell's hawkish comments and his dismissal of a U.S. Bitcoin reserves have led to uncertainty in the cryptocurrency markets. As the market digests these remarks, Bitcoin and other cryptocurrencies face short-term volatility, with many investors closely monitoring the FED's stance on inflation and future regulatory decisions.