Recent statements by American officials show that they have no plans to return from contractionary monetary policies. However, experts say that the increase in the bank interest rate in the future is not going to have a strong impact on the financial markets.
According to CoinDesk, the price of Bitcoin today reached its lowest level in more than a month, while Jerome Powell, the head of the US Central Bank, emphasized the continuation of the implementation of contractionary monetary policies in this country.
Bitcoin hit a low of $19,945 today, but is currently trading above $20,200, having fallen 6% in the last 24 hours.
Powell said that the decision of the Central Bank of America’s Free Market Committee to increase the bank interest rate by 0.50 or 0.75 percentage points in September depends on the status of the received statistics and the changing outlook of the economy.
Edward Moya, senior analyst at Oanda Group, recently said that traders should expect increased risk aversion in the market to push the price of Bitcoin to levels below $20,000.
Risky assets (such as digital currencies) are struggling to maintain their value while Powell will continue his fight against inflation through the implementation of contractionary monetary policies; Even if this slows down the US economic growth.
Following Powell’s speech the previous day, altcoins in the market also faced a price drop. Among the first 100 currencies of the market, Cosmas (ATOM) performed the worst and lost 14% of its value in the last day and night. Ethereum also experienced a 9.5% drop during this period.
S&P500 and Nasdaq also reacted to Powell’s speech on Friday and each fell by 3.37% and 4.10% respectively.
Pavel had said in his speech the previous day:
Restoring stability to prices will take some time and will require us to make good use of the tools at our disposal to rebalance supply and demand in the market.
Josh Olszewicz, director of research at Valkyrie Investments, said:
We expect to see an increase of 0.75 percentage points in the bank interest rate in September, and we do not think that this event will have a strong impact on the financial markets. After that, until the inflation is curbed and the unemployment rate returns to a healthier number, we will have a successive increase in the bank interest rate.