Bitcoin Dips Below $26K, Smaller Cryptos Head Lower on Fed’s Powell’s Hawkish Remarks

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Bitcoin Dips Below $26K, Smaller Cryptos Head Lower on Fed’s Powell’s Hawkish Remarks

Bitcoin (BTC) has slipped below $26,000 on Friday as investors have digested U.S. Federal Reserve Chair Jerome Powell’s continued commitment to containing inflation, including raising interest rates further if needed.

In choppy action following Powell’s remarks at the Kansas City Fed’s annual Jackson Hole Symposium, stock and bond prices also sank into the red before a late-morning turnaround pushed both modestly higher. At one point, the U.S. two-year Treasury yield surged to an almost 17-year high at 5.10% before retreating a handful of basis points. Investors now give a 54.5% probability of a higher fed fund rates by mid-November, according to the CME FedWatch Tool.

Read more: Fed’s Powell at Jackson Hole: Prepared to Raise Rates Further if Appropriate

Bitcoin also initially turned down, sinking to $25,800 from about $26,100 prior to the Powell speech. At press time, the price had bounced to roughly $25,900.

The broader crypto markets are following bitcoin with modest losses, with the CoinDesk Market Index’s (CMI) lower by 0.5%.

Solana (SOL), Arbitrum (ARB), Optimism (OP), PEPE see steeper falls

Solana’s SOL declined the most among crypto majors, dipping near 3% through the past 24 hours. Tokens of prominent Ethereum scaling networks Arbitrum and Optimism also retraced, with ARB falling 4.1% and OP sinking 3.6%.

MKR, the governance token of the $5 billion decentralized finance lender MakerDAO, plunged about 4% to its lowest price in a month as the platform is exposed to an impeding loan default at tokenized credit protocol Centrifuge.

Controversial frog-themed memecoin PEPE plummeted 17% as the project’s multisig wallet, one of the single largest holders of the token, transferred coins to exchanges potentially to dump on the market.

What’s next for BTC price

«Bitcoin has been trading as a risk-on asset and is therefore subject to macro pressures,» Sacha Ghebali, director of strategy at digital asset data provider The Tie, said in an interview with CoinDesk TV Friday morning.

BTC has spent most of the week trading at around $26,000, below the 200-day moving average for the first time since January.

«Historically, BTC trading below its 200-day average has been correlated with a market in a bear state,» Ghebali said. «The market may still be digesting the sell-off last week.»

He added that market participants are awaiting for a catalyst that could pull crypto prices up such as a potential approval of a spot bitcoin ETF. However, the high optimism about the recent flurry of applications including from BlackRock might be an «overreaction,» Ghebali noted.

In lack of an immediate catalyst, the market may take a breather and continue chopping at current levels following its breakdown from the uptrend during the first half of the year, Rachel Lin, CEO of derivatives decentralized exchange SynFutures, explained in a emailed note.

«It’s possible that BTC and the wider crypto market have just entered a consolidation phase and could potentially renew their uptrend in the near future,» Lin said. «Looking at the current BTC chart, we can see it has formed a ranging pattern with 25,000 as its lower limit and 31,500 as its upper limit. A sustained break on either side of this range could decide the market’s direction for the coming months.»


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