Cryptocurrencies Rebound After Sell-Off as Market Digests Fed Message
The recent market turbulence was sparked by comments from Fed Chair Jerome Powell, who warned about the rising risk of stagflation.
Quick overview
- Cryptocurrencies are showing signs of recovery, with Bitcoin holding above $84,000 and Ethereum attempting to reclaim $1,600.
- Solana leads altcoin gains with a 6% increase, while Tron continues to struggle with a 3% decline.
- Federal Reserve Chair Jerome Powell's comments on stagflation and tariffs have created market turbulence but also sparked optimism for clearer crypto regulations.
- Wall Street reacted negatively, with the Nasdaq dropping over 3% due to a significant decline in Nvidia shares.
Live BTC/USD Chart
Cryptocurrencies are showing signs of recovery this Thursday, setting the stage for a potentially positive weekly close.
Bitcoin (BTC) is holding above $84,000 and is once again approaching the $85,000 mark, consolidating a technical rebound. Ethereum (ETH), meanwhile, is attempting to reclaim the key $1,600 level, which it lost abruptly following recent remarks from the Federal Reserve.
Among altcoins, there’s also a modest recovery. Solana (SOL) leads the gains with a 6% increase, while other tokens like Dogecoin (DOGE), XRP, and Cardano (ADA) are posting more modest upticks. Tron (TRX), however, remains under pressure, falling an additional 3% over the past 24 hours.
Powell’s Message and Market Reaction
The recent market turbulence was sparked by comments from Federal Reserve Chair Jerome Powell, who warned about the rising risk of stagflation—a scenario where high inflation coexists with sluggish economic growth—and tempered expectations of imminent rate cuts.
Powell emphasized that the newly imposed tariffs are “larger than anticipated” and may have more persistent economic effects than previously thought. If that outlook materializes, he noted, the Fed could face a “conflict of objectives” between its dual mandate of price stability and full employment. Historically, this kind of scenario tends to weigh heavily on risk assets, including tech stocks and, by extension, cryptocurrencies.
At the same time, Powell acknowledged the need for clearer regulations surrounding stablecoins and hinted that some banking regulations related to crypto might be relaxed. These comments sparked a degree of optimism in the crypto market, which increasingly views regulatory clarity as a pathway to greater legitimacy and institutional adoption.
Wall Street Reacts with Caution
Wall Street, however, responded more negatively. The Nasdaq dropped over 3%, dragged down by a steep 7% decline in Nvidia shares after the company announced a $5.5 billion accounting hit due to U.S. export restrictions on China.
In terms of monetary policy, markets have now recalibrated their expectations. While CME’s FedWatch tool still projects three to four rate cuts by year-end, the likelihood of those cuts happening as early as May or June has decreased significantly.
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