August has been a big-time roller-coaster ride for crypto market. Started with all red, it made a lot of investors very happy going all green, reaching new highs. With Ethereum rising and leading the rally big time, all was good. However, yet again there is a sharp plunge making most of the charts go red.
The reason – U.S. Federal Reserve Chair Jerome Powell’s Jackson Hole speech. Traders are holding on to get more information on interest rates and inflation policies that could reshape the global markets.
As Bitcoin, Ethereum and some major altcoins slide further down, it sets a reminder that once seen as independent, the crypto ecosystem is playing the same tunes as global monetary policy. 
What makes Jackson Hole Speech important?
The Jackson Hole Economic Symposium is not just any other conference. It is one of the most impactful gatherings in global finance. Every year it witnesses the gathering of bankers, economists and other policy makers to discuss global finance and issues affecting it. Fed Chair Jerome Powell has a big reputation, when he speaks, everyone listens. He won’t be talking about the U.S. economy only. Every shift in his tone will be signalling what to expect from upcoming U.S. interest rates. His speech holds the power to generate a butterfly effect covering everything from wall street to crypto.
The crypto market has much higher stakes. It has always been sensitive to such signals and Powell’s speech has become one such defining moment. If Powell’s stance remained hawkish through his speech, then it may deepen the slump triggering sell-offs. However, if there remains mildness, a kind of softness, then the market can go all green igniting the next rally.
Why has it triggered a wave of red?
Bitcoin has shaken investors’ confidence falling sharply below key support level. Ethereum too followed the lead dragging altcoins along with. Exchanges are seeing limited trading volumes showcasing investor’s cautiousness. This dip is the ‘chart version’ of anxiety and palpitation investors are going through.
The core reason to list is the decision around interest rates. If inflation remains sticky like earlier then, there can be no rebate in the rate cuts. If the rates remain on the higher side, then traditional assets like bonds can be a more attractive investment option in comparison to crypto. Also, this could drain liquidity from the markets.
Shall we see it as just another correction?
High volatility, corrections, and price surge is not new to crypto investors. It is common for the market to take a hit following any major events like inflation data release, FOMC meetings etc. For investors holding on their crypto such instabilities are viewed as momentary.
But this time, there is a catch. This time, the correction is seen right before Powell’s speech. For the crypto market this could be a hit or a miss as it is now deeply connected to the global economy. This speech will not only influence banks but also Bitcoin, which is rather looking for comeback support.
Conclusion : crypto market
This crypto dip reflects the deep connection that has formed between crypto markets and the global macroeconomics signals. Although traders are waiting for further impacts, long term believers see it as a momentary phase that too shall pass.
As Powell takes the center stage, everyone will be looking out at the charts and crypto will enter the league of big players. May whatever be the result, one thing is clear – Fed’s words now carry weight equivalent to Bitcoin’s code.
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FAQ
If crypto is decentralized then why will the Fed Reserve’s impact on Bitcoin prices?
Bitcoin and other crypto currencies have become part of global liquidity. They have sneaked into the portfolios of big investment firms and governments. Fed announcements affect crypto investors’ risk appetite and investments.
What exactly is the Jackson Hole Economic Symposium?
It is one of the most renowned financial gatherings in the world. World leaders from the fields of banks and economics along with poly makers discuss global financial issues.
Why is this correction different from past dips?
Crypto is known for its volatility, but this time, corrections are connected deeply with Fed Chair’s Jackson Hole speech. This signifies that Bitcoin which once was an independently trading asset is reacting to global economics and political shifts.
