The Fed causes Bitcoin and Ethereum to fall: is Jerome Powell preparing for a frosty December for cryptocurrencies?

While last week the financial markets were in turmoil and the Fed was lowering its rates, it seems that the story will not be the same for the weeks to come. Indeed, traders expected a cut in interest rates from the American Federal Reserve (Fed) for the month of December. Unfortunately, these hopes have been dampened by recent statements from Jerome Powell, Chairman of the Fed. An announcement which had an immediate impact on the prices of Bitcoin and Ethereum.

The Fed confirms its prudent position

At a conference in Dallas on November 14, Jerome Powell claimed that, despite signs ofimprovement in inflationthe American economy is still fragile enough to justify a restrictive monetary policy.

Powell stressed that the rate reduction not an immediate priority for the Fed, explaining that:

“The economy is not sending any signals that we should be in a hurry to lower rates (…) The strength we currently see in the economy gives us the ability to approach our decisions carefully. »

This statement took financial markets by surprise, which were counting on a potential decline to ease pressure on risky assets, including cryptocurrencies.

Bitcoin and Ethereum under pressure: Prices react to Fed statements

After Jerome Powell’s statements, the price of Bitcoin (BTC) fell by around 1.5%, from $89,600 to $88,300 in the minutes that followed. At the time of writing, it was trading around 88,000, marking a 3.2% decline over the last 24 hours. Ether (ETH), meanwhile, followed a similar trajectory, falling slightly to stabilize around $3,000.

Let’s reassure ourselves. Despite this short-term correctionthe crypto market remains on the rise overall. Bitcoin still displays a impressive weekly gain of 15%, while other assets like Cardano (ADA), Ripple (XRP), and Stellar (XLM) surged 20% to 40% over the same period.

Powell’s remarks also weighed on expectations of an interest rate cut at the Fed’s December meeting. According to CME FedWatch, the odds of a rate cut fell to 62% from 83% the day before, reflecting more cautious market sentiment. Nevertheless, the overall tone remains favorable to a gradual recovery of risky assets, especially if economic signals improve in the coming weeks with the election of Donald Trump to the 47th presidency of the USA.