Powell also said a 0.5 percentage point rate hike was “on the table” for next month.
James Bullard, chairman of the St. Louis Federal Reserve, said Tuesday he expects interest rates to hit 3.5% by the end of the year.
Bitcoin fell to $40,586 on Friday, after hitting a midday daily high of $42,965, while the broader cryptocurrency market retreated to $1.88 trillion.
On Tuesday morning, the price of bitcoin fell below the $40,000 mark before regaining a few hours later. On Thursday, bitcoin hovered just above $42,000.
Make or Break for Bitcoin
The $40,000 barrier has emerged as a milestone for bitcoin, market watchers say, as its performance from there could set the tone for whether the market hits another bullish or bearish phase.
With inflation soaring, equities crashing, and investors unsure how fast the central bank will raise interest rates, many would say now is the perfect time to invest in bitcoin.
Nevertheless, the world’s most valuable digital asset has lost almost 20% of its value since the start of the year, falling as low as $33,000 on January 25 before recovering. Bitcoin reached an all-time high of around $69,000 on November 8 last year, just over three months ago.
Bitcoin’s trading history has been turbulent and volatile since its inception. The crypto-currency, as an asset class, continues to evolve in step with the forces that influence its prices.
Cryptocurrencies continued to trail the recent decline in the tech industry, with the Nasdaq dropping 2% on Friday, the biggest drop since mid-March.
A rate hike to contain inflation
Interest rates are being raised to counter rising inflation, which reached 8.5% last month. In contrast, high-growth investments, such as technology, are valued using the concept of discounted cash flows.
Investors are grappling with rising inflation, geopolitical issues and worries about central bank monetary policy tightening.
Minutes from the Fed’s March meeting, released last week, revealed plans to cut its balance sheet by $95 billion each month to contain inflation.
Meanwhile, in another development, Tesla, Elon Musk’s electric vehicle company, is hosting bitcoins.
On the company’s balance sheet, digital assets total $1.261 billion. Since the first three months of last year, the Austin, Texas-based electric vehicle giant has neither bought nor sold any crypto assets.
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