Bitcoin Turns Lower Ahead of Powell’s Economic Outlook; What to Expect
Bitcoin slipped into negative territory ahead of the Federal Reserve Chairman Jerome Powell’s scheduled speech about the US economy.
The benchmark cryptocurrency waved between profits and losses, only to fall by 0.85 percent to $10,701 ahead of the New York opening bell. Futures tied to Bitcoin also plunged by 0.37 percent, signaling a rough start for the cryptocurrency.
Bitcoin’s slippage coincided almost with the gold markets, further validating the cryptocurrency’s growing dependence for cues from traditional assets. At the same time, BTC/USD fell in response to a stronger US dollar sentiment; the pair has formed an erratic inverse correlation with the greenback since March 2020.
Mr. Powell will address the National Association for Business Economics annual meeting on Tuesday at 10:40 am EST. There, the Fed chair will speak about the state of the US economy after his office introduced unprecedented expansionary tools to shore it up.
Investors, on the other hand, expect more clarity on where the Fed stands on its inflation target above 2 percent. They will also be watching Mr. Powell for any hint of more stimulus support from the US central bank, now that the Democrats and the Republicans are reportedly finalizing the deal.
On Wednesday, the Fed will release minutes from its mid-September meeting when officials vowed to keep interest rates near zero until 2023. More clarity from that roundtable discussion could allow investors to see how the central bank officials view the low-rate policy and what more can be done to support the US economy.
Bitcoin expects to stay cautious before and after the two events. Traders have seemingly assessed the role of Mr. Powell’s statements on the cryptocurrency’s prices. He, more or less, would repeat what he told the Senate Banking Committee: that the Fed cannot aid the economy any further without financial support from the US Congress.
Democratic House Speaker Nanci Pelosi told CBS on Sunday that she and Treasury Secretary are close to finalizing the stimulus. Bitcoin rose on Monday after assessing Ms. Pelosi’s statements. But when global strategists reiterated their concerns about a no-deal until the US presidential election, Bitcoin’s upside lost steam.
That said, Mr. Powell’s statement on Tuesday may end up doing nothing concrete to influence Bitcoin’s short-term bias.
The Other Chief
Across the Atlantic, the European Central Bank’s President Christine has outrun her US counterparts in delivering the next stimulus package.
The central banker said Tuesday that her office is ready to inject fresh stimulus to support the eurozone’s erratic economy from the coronavirus pandemic. One of her main tools will be pushing interest rates further below zero.
“We are prepared to use all the tools that will produce the most effective, efficient, and proportionate outcome,” Ms. Lagarde told the Wall Street Journal.
The prospect of earning no yields from saving euro could shift European investors back into riskier assets. That said, Bitcoin could eye gains against the euro in the coming sessions.