Bitcoin Drops to $42.4K following Powell's Dismissal of March Rate Cut

• Impact of Jerome Powell's Remarks on Crypto Markets
• Bitcoin's Current Status
• Fed's Decision and the Reaction of the Market
• Other Cryptocurrencies and Traditional Markets Reaction
• Market Analyst's Opinion
• Bitcoin's Future Movement

Impact of Jerome Powell's Remarks on Crypto Markets

Jerome Powell, the Chairperson of the Federal Reserve, has caused a stir in the crypto world with his remarks during the FOMC press conference in March, hinting at a delay in potential interest rate cuts. This news led to Bitcoin$42,260 -0.64% dipping to $42,300, while other cryptocurrencies like ETH, ADA, and DOT fell by 3%-4%. Solana$104 5.03%'s SOL experienced a more significant dip, tumbling over 6%.

Bitcoin's Current Status

Bitcoin seems to be stuck in a state of consolidation, fluctuating between $42,000 and $44,000 without a clear direction, as stated by Swissblock. The comments from Powell seem to have had a significant effect on cryptocurrencies in general, with Bitcoin (BTC) slipping below $43,000. This cooling effect was caused by Powell's hawkish comments, which affected anticipations about a forthcoming rate cut.

Fed's Decision and the Reaction of the Market

In an anticipated development, the Federal Open Market Committee elected to maintain its benchmark federal funds rate range at 5.25%-5.5% following their first meeting of the year. Market participants were more invested in searching for hints regarding when the Fed might start reducing rates, with the expectation that it might occur as soon as their next meeting in March.

However, Jerome Powell's comments during the press conference following the meeting put a damper on these speculations. He stated, I don't think it's likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to cut.

This led to a sharp drop in risk assets, including cryptocurrencies. Bitcoin fell to $42,300 from its daily high of $43,700, a decrease of 2.3% in the past 24 hours. The CD20 index, a broad crypto market benchmark covering approximately 90% of the total market value of digital assets, also declined by nearly 3% during the same period.

Other Cryptocurrencies and Traditional Markets Reaction

Market Analyst's Opinion

Alex Krüger, a macro analyst and co-founder of Asgard Markets stated, The market has gotten ahead of itself on the rates side, suggesting that cuts may start in May or June, rather than in March. This sentiment is reflected in the odds of a March rate cut, which have fallen to 34.5% from about 65% prior to Powell's remarks, as indicated by the CME FedWatch Tool.

Bitcoin's Future Movement

Ruslan Lienkha, the chief of markets at Web3 fintech platform YouHodler, believes that any hawkish statements about the continued high rates may trigger a correction in the stock market, resulting in capital flowing out from risk assets such as Bitcoin. However, he also suggests that Bitcoin's downward movement could be restricted because the cryptocurrency seems to be consolidating between $44,000 and $42,000. Swissblock analysts in a recent report reiterated this, stating that the areas around $42,000 and below $40,000 could potentially act as key support levels for the price where buyers might step in.

Edited by Jonathan Stoker