Bitcoin Rises Above $48K as Dollar Drops After Powell’s Dovish Comments
No news is good news for the bitcoin market as the Fed chairman avoids specifying a “tapering” time frame at virtual Jackson Hole symposium.
Bitcoin gained Friday, and the U.S. dollar dropped in foreign-exchange markets, after Federal Reserve Chairman Jerome Powell leaned dovish in a key speech at the U.S. central bank’s annual Jackson Hole, Wyo., conference. He provided no concrete date for starting to taper or scale back the Fed’s $120 billion-a-month bond-buying program.
Bitcoin, the top cryptocurrency by market value, jumped from $47,200 to $48,200 after earlier managing to remain above the key 200-day moving average support of around $46,000.
The U.S. Dollar Index, which tracks the greenback’s value against major fiat currencies, dropped from 93.18 to 92.67 to trade 0.35% lower on the day, per data provided by TradingView.com.
Gold jumped 0.65% to $1,800 per ounce, and U.S. stock markets continued to trade positive; the 10-year U.S. Treasury yield fell by two basis points to 1.32%.
In the highly anticipated speech at the Federal Reserve Bank of Kansas City’s annual economic symposium, Powell said the economy no longer needs as much policy support but the central bank should refrain from making an “ill-timed policy move” in response to this year’s “transitory” rise in inflation.
Powell added the Fed could begin unwinding its asset purchase program before the year’s end, but stressed it would not necessarily lead to any hike in interest rates.
“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” Powell said in prepared remarks for the virtual summit.
Powell’s taper talk is not surprising because several Fed officials recently hinted at the central bank kick-starting the process this year. However, Powell’s comments on interest rates seem to have convinced markets that rates are likely to remain low for a prolonged time, as evidenced from the uptick in the zero-yielding asset like gold and the decline in bond yields.
While bitcoin has bounced after Powell’s remarks, it still remains trapped in a descending channel on the hourly chart. A breakout could yield a more sustained move above $50,000.
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