In a few hours, the Bitcoin and financial community will be glued to their screens as Fed Chair Jerome Powell addresses the Jackson Hole symposium at 10:05 am EST. His remarks are anticipated to sway not just traditional markets like stocks and commodities, but also the volatile realms of Bitcoin and crypto.
The backdrop for Bitcoin and the broader crypto market is far from stable. The recent crash from last Thursday still lingers, casting a shadow of uncertainty. The Jackson Hole event, historically a catalyst for market movements, is poised to introduce fresh volatility. The direction of this volatility – bullish or bearish – hinges largely on Powell’s tone: hawkish or dovish.
What To Expect From Jerome Powell?
A year ago, Powell’s unexpected revision to his speech sent shockwaves through the financial ecosystem, causing stocks, Bitcoin, and other cryptocurrencies to plummet, exacerbating the global bear market. This has led many to wonder, “do we receive another hawkish surprise?” However, the prevailing sentiment is that Powell might not drop any bombshells this time around.
JPM’s Market Intel desk opined, “the Fed is strictly data dependent, and that any pause will be characterized as a ‘hawkish skip’ to maintain optionality.”
Bank of America, on the other hand, has its own set of expectations. The bank foresees Powell reaffirming the Fed’s allegiance to its 2 percent inflation target. Despite some progress, Powell is likely to emphasize that there’s still significant ground to cover. Consequently, the bank predicts a prolonged phase of restrictive policy.
Drawing from Powell’s comments at the July press conference, where he acknowledged the more balanced risks surrounding the Fed’s policy impact, the Bank of America (BoA) speculates that his tone at Jackson Hole might shift. This is especially considering the stronger-than-expected 2Q GDP at 2.4% and the 1.0% surge in July’s retail sales ex-autos. The BoA is bracing for Powell to counter the anticipated rate hikes for the upcoming year, given these robust numbers and the potential inflationary pressures they signify.
Walter Bloomberg’s tweet earlier today encapsulated the sentiment: “Fed Expected To Drill In ‘Higher For Longer’ In Jackson Hole.”
Julian Brigden from Macro Intelligence 2 weighed in, stating, “They will keep holding out this sort of sword of Damocles in the shape of possibly another 25 basis points of rate hikes, while emphasizing they are not going to cut any time soon.” Brigden’s outlook suggests that inflation will persist above target, leaving little room for a dovish stance.
Bitcoin And Crypto Brace For Jackson Hole
For Bitcoin and crypto investors, the million-dollar question is whether Bitcoin, which faced a downturn post-Jackson Hole in 2022, will witness the opposite this year. Keith Alan, founder of Material Indicators, drew attention to the patterns observed in Bitcoin’s price action. “Last year, in the lead-up to Powell’s speech, Bitcoin broke through key technical support levels. We’re seeing similar patterns now,” Alan noted.
He highlighted the recent tests and losses of the 21-Day, 50-Day, 100-Day, and 200-Week Moving Averages, drawing parallels to the previous year’s behavior. However, Alan urged caution, stating, “The similarities in the current price action don’t guarantee a repeat of last year. Since then, core inflation has decreased, and Powell’s remarks have been more measured. The market’s direction remains uncertain, but it’s primed for a significant move.”
He emphasized the need for vigilance and preparedness, concluding, “We must be aware of these patterns but not overreact. Powell’s words will undeniably influence markets. Proper risk management is crucial.”
In conclusion, as the financial world awaits Powell’s address, the consensus is clear: his words will shape markets, but the direction remains to be seen. At press time, the Bitcoin price remained flat, trading at $26,082.
Featured image from Moguldom, chart from TradingView.com