The cryptocurrency market experienced a significant evening as Bitcoin tested above $94,000. While Federal Reserve Chair Jerome Powell delivered a speech, former President Donald Trump made statements regarding artificial intelligence. Contrary to concerns, Powell’s remarks were not as hawkish as expected. This article will explore the implications of today’s events and the potential outcomes for the market.
Federal Reserve and Cryptocurrencies
The Federal Reserve announced an interest rate cut and the purchase of $40 billion worth of treasury bills. While this isn’t full-scale monetary easing, it’s a strategic move by Powell to ensure a smooth transition. Notably, there were fewer warnings about inflation concerns, highlighting a critical aspect of today’s announcements.
Regardless, the Fed is edging towards monetary expansion, suggesting a gradual shift towards quantitative easing (QE). Powell could have expressed concerns about inflation today, but instead, he revealed revised data indicating employment might be weaker than anticipated. Crypto markets may experience volatility; failures to close above $94,000 could see prices dip towards $88,000, driven by leveraged liquidations.
Despite predictions for a 3.9% interest rate by the end of 2026, suggesting a potential hike next year, Powell stated that interest rate hikes are not currently part of anyone’s primary scenario. Economist Nick Timiraos emphasized these points: Powell confirmed readiness to “wait and see,” acknowledging a split in committee opinions and revealing that employment growth could be surprisingly negative due to measurement difficulties.
The interest rate drop underscores the Fed’s acceptance of actual employment figures being lower. Future meetings, scheduled in about 49 days, may drive further market volatility. The market forecasts an initial rate cut by April, with expectations of a single cut by July. Despite only two cuts predicted for 2026, Trump’s potential nomination of a new Fed chair could uplift expectations for the year’s final five meetings, with Powell remaining Chairman for January, March, and April meetings only.
At the time of writing, BTC was nearing a $92,000 floor, erasing gains from the Q&A session.
Trump’s Statements
Simultaneously, Trump was making headlines during a roundtable with CEOs of AI-focused companies. His announcements contributed to the positive market sentiment as Powell spoke. Trump revealed discussions with Senators about regulations, hinting at easing for the AI sector. Additionally, he mentioned meeting with WARSH for Fed Chair selections.
Trump’s key statements included plans to approve factory construction within weeks and ambitions for 20% to 25% GDP growth. He argued for continual stock market rises and advancements beyond 3% or 4% GDP. Trump suggested the Fed’s interest rate cut could have been twice as significant.
The agenda remains packed, and upcoming data will markedly impact market charts.