Stocks and Bitcoin both fall after the FED’s chair warning on high inflation as he said it is no longer considered as “transitory” so let’s read more in our latest Bitcoin news today.
The FED today said that inflation will no longer be considered transitory and stocks and bitcoin both reacted badly to the news. Bitcoin suffered losses as the entire crypto and traditional markets as well, seem to have been scared off by the comments made by FED’s chair Jerome Powell about inflation. Bitcoin dropped to $56,245 during a hearing before the US Senate panel, marking a 5% dip from the $59,161 after the Fed Chairman said that the inflation should not be considered transitory:
“We tend to use the word transitory to mean that it won’t leave a permanent mark in the form of higher inflation. I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”
The Dow Jones dropped by 1.8% following the comments while the S&P 500 dropped by 76.25 points or by 1.6%. The biggest cryptocurrency by market cap recovered since and reached $57,433 at the time of writing while still owning 2% in the past day according to the CoinGEcko data. Powell added that the omicron variant of the COVID-19 virus poses even more risks to employment and economic activity as well as increased uncertainty for inflation which seems to have had a bearish effect. Bitcoin, despite being seen as independent from the traditional markets, dropped hand in hand with the stocks after Powell’s comments which is a sign that the cryptocurrency continues to be correlated with the stock market.
Bitcoin is typically seen by proponents as a hedge against inflation because just like gold it has a finite supply of 21 million coins, unlike the US dollars. The crypto market again reacted badly to signs that the inflation in the US economy could persist suggests that BTC and other cryptocurrencies could yet be too risky for investors in times of market uncertainty conditions.
As recently reported, Bitcoin plummeted by a few thousand dollars in a few hours to a six-week low of less than $55,000 and most of the crypto market experienced an ever harsher crash which is why the Bitcoin liquidations surged to $300 million. If you also want to check your real-time value of Bitcoin, make sure to check our Bitcoin price calculator.
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