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The Federal Reserve chair said households and businesses should prepare for pain as the central bank works to bring down inflation.
Bitcoin dropped almost 5% in value within no more than two hours following Fed Chair Jerome Powell’s long-awaited keynote address at the Fed’s Jackson Hole, Wyoming, economic conference on Friday.
US equities slid with crypto, with the S&P 500 index down more than 2%. The stock market had not priced this in except the last couple of days and it is because the risk was that they would be hawkish.
The market] is pricing it in now at least as much as it believes the Fed, but it’s about Powell’s legacy and his credibility at this point.
“Reducing inflation is likely to require a sustained period of below-trend growth … While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses”, Powell added.
The largest cryptocurrency by market capitalization, bitcoin initially showed little reaction to Powell’s remarks, but has now turned sharply lower – to the current $20,700 from just shy of $22,000 ahead of the speech.
