Bitcoin Tumbles Below $21K After Powell’s Hawkish Remarks

The Federal Reserve chair said households and businesses should prepare for pain as the central bank works to bring down inflation.

AccessTimeIconAug 26, 2022 at 4:30 p.m. UTC
Updated Aug 26, 2022 at 8:34 p.m. UTC

Helene is a U.S. markets reporter at CoinDesk, covering the US economy, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

Bitcoin (BTC) dropped almost 5% in value in the two hours following Federal Reserve Chair Jerome Powell’s long-awaited keynote address at the Fed's Jackson Hole, Wyoming, economic conference Friday morning. Equity markets 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’s because the risk was that they would be hawkish, not the belief,” Bob Iaccino, chief strategist at Path Trading Partners and co-portfolio manager at Stock Think Tank, told CoinDesk.

“[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,” he added. Iaccino further noted that markets had rallied ahead of the speech – perhaps anticipating more dovish remarks – thus likely exacerbating today’s decline.

From Powell’s address: “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.”

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.

In addition to the S&P 500’s 2.15% decline, the Nasdaq is lower by 2.7% and the Dow Jones Industrial Average by 1.8%.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Helene is a U.S. markets reporter at CoinDesk, covering the US economy, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

CoinDesk - Unknown

Helene is a U.S. markets reporter at CoinDesk, covering the US economy, the Fed, and bitcoin. She is a recent graduate of New York University's business and economic reporting program.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC