Bitcoin surges past $24,000 as Fed head Powell discusses “deflation”


While the market anticipated the rate hike and Jerome Powell hinted further rate hikes are forthcoming, the market responded favourably to the Fed chairman’s remarks.

The price of Bitcoin surpassed $24,000, and the market capitalization of all cryptocurrencies increased by over 4%, as United States Federal Reserve Chair Jerome Powell stated that inflation in the world’s biggest economy had started to moderate.

“We can now declare, I believe for the first time, that the disinflationary process has begun […] we see it in goods prices,” said Powell during a Federal Open Market Committee news conference on February 1, soon after announcing a 25 basis point interest rate rise.

The rate rise and Powell’s comments looked to be well-received by the cryptocurrency markets, which had been trading sideways before the speech but saw their market capitalization climb by more than $40 billion in the hours after the announcement.

According to the most recent data from Coinmarketcap, the global crypto market capitalization has reached $1.09 trillion, an increase of 3.88% from the previous day.

According to Coinmarketcap, Bitcoin surpassed $24,000 for the first time in 2023, hitting $24,161.27.

Powell said, however, that they anticipate inflation in the services sector to continue growing for some time and to be prepared for “continuing rate hikes.”

“We anticipate more sustained inflation in that [services] sector, which will need more time to reduce, and we must finish the job. This is why we are here.”

Powell stated that “continuing rate hikes” would be warranted as the Federal Reserve attempts to return inflation to its 2% target.

It should be mentioned that disinflation refers to a slowdown in the pace of growth of general price levels, while deflation refers to a fall in the general price level of products and services.

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