The crypto market took a breather on Monday, as Bitcoin and major altcoins showed minor declines over the past 24 hours. Federal Reserve Chair Jerome Powell unveiled the central bank's monetary policy framework for 2025 Monday morning.
The framework was reviewed with the understanding that significant changes have occurred in the economy since the Fed's previous major reevaluation in 2020, and that the Fed must recalibrate its strategies, tools, and communications.
On May 16, Powell pointed to the 2020 framework, created during a period of low inflation and low interest rates, as no longer relevant, as the pandemic had distorted all economic norms.
The Fed's assurance that it would allow inflation to moderately "overshoot 2%", he acknowledged, became "irrelevant," as inflation spiked globally and the Fed had to raise rates 525 basis points in 16 months.
Powell reiterated the Fed's commitment to a 2% inflation target, calling anchored inflation expectations "critical to everything" the Fed plans to do.
The U.S. Federal Reserve's unprecedented monetary and fiscal stimulus in 2020–21 helped fuel a massive crypto boom, driving Bitcoin and Ethereum to all-time highs in late 2021.
However, rising inflation in 2022 prompted the Fed to tighten policy, resulting in a nearly $2 trillion decline in total crypto market value and a roughly 70% drop in Bitcoin's price.
Crypto markets rebounded and stabilized in 2023, signaling renewed confidence and increased risk appetite.
According to Bankrate, most investors look for lower interest rates. Many proponents of the cryptocurrency market believe, to their dismay, that it is often affected by the Fed's moves and monetary policies. It remains to be seen which way the crypto market swings, with new upcoming policies.
However, as of the time of writing, Bitcoin is trading at $104,220, down 1.03% on the day but still up 8.25% for the month, according to Kraken. Ethereum dropped 0.16% to $2,538, but remains the leading large-cap cryptocurrency over the last 30 days, showing a 38.58% gain.
This article has been published in thestreet.com via Yahoo News.
Fed Chair Powell reveals new inflation target
Fed revises post-pandemic framework, reaffirms 2% target, and updates tools amid inflation surge.
finance.yahoo.com
