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Bitcoin has dropped 3.8% in the 24-hour chart as the Chairman of the U.S. Federal Reserve Jerome Powell gave a speech on the current economic outlook. As of press time, the crypto market has negatively reacted to Powell’s statements as the intuition finally hints at a possible start of tapering.
Per a report by Reuters, the FED Chair said the following on inflation, high expectations from investors on the metric have been driving the price of Bitcoin to new highs in 2021:
Supply constraints and elevated inflation are likely to last longer than previously expected and well into next year, and the same is true for pressure on wages.
Powell took a 180 degrees turn from previous statements. The phrase “inflation is transitory” has been associated with Powell and the Federal Reserve’s inability to take control of the economic situation.
The FED also faces a current scandal due to many of its members on national and state levels have allegedly profited from taking positions before big announcements made by the institution. This has yielded millions in gains to many of its high-ranking members.
As Bitcoinist reported, mathematical artist Nelson Saiers embodied the apparent general sentiment of mistrust towards the U.S. FED with its latest piece: an inflatable Bitcoin rat place on the institution’s building in New York. The work tries to convey the damage the FED’s reputation has taken over the years.
The FED Chair has tried to take on new measures to stop similar actions in the future, but the dame seems too great to fix in the short term. Ryan Selkis, founder at crypto research firm Messari, commented the following on Powell’s inflation statements and the institution’s overall performance:
Bitcoiners told you the truth. The Fed either lied or was so bad at their jobs the whole lot should be fired. Either way bitcoiners told you the truth.
Bitcoiners told you the truth.
The Fed either lied or was so bad at their jobs the whole lot should be fired. Either way bitcoiners told you the truth. https://t.co/iR5PJVFpCq
— Ryan Selkis (@twobitidiot) October 22, 2021
Bitcoin With More Downside Risk
The lack of trust, inflation expectations, and a possible start of tapering are creating a strong cocktail, as Bitcoin trends downwards in lower timeframes.
Although inflation is key, the injection of liquidity into global markets by the FED via its purchases of assets program has given the crypto and traditional market a great boost.
Thus, any change into this dynamic by implementing tapering in 2022 could jeopardize Bitcoin’s run in the future.
In the short term, Bitcoin seems in danger of more downside, but with signs of strength on the bull’s corner. QCP Capital records an increase in leverage for the futures sector, as seen below.
The aggregated Open Interest (OI) for the Bitcoin Futures surpassed 400,000 BTC notional, the firm claimed. This metric stands very close to its previous all-time high and is accompanied by a spike in the funding rates for BTC perpetual contracts, but very far from its April levels, right before Bitcoin crashed.
QCP Capital added the following on the possibility of BTC’s price resuming its rally:
This means there is possibly still room for additional topside euphoria but we are at levels that are starting to stretch the market.