Fed Chair Jerome Powell spoke last Friday in Wyoming and hinted at the potential for “another unusually large increase” in the federal funds rate for September - just as he had previously signaled in July’s FOMC meeting. Powell, however, didn’t indicate the further “large increase” to be a sure thing but instead stated that it “will depend on the totality of the incoming data and the evolving outlook”.
Following Powell’s hawkish commentary, major stock indexes, cryptocurrencies, and precious metals slid significantly in value. Over $240 billion was erased from the crypto market, and the Crypto Fear and Greed Index continues to slide lower, edging toward “extreme fear.”
After Powell’s statements in Wyoming, the S&P 500, Dow Jones, and Nasdaq Composite were all down more than 3%. This is important as Bitcoin’s correlation with the S&P 500 continues to grind upwards, currently sitting at 0.59 and close to an all-time high.
What you should know
While the market downturn has mostly been blamed on the Fed, there is speculation that the Mt Gox bitcoin stash of 140,000 BTC is soon to be released. Some believe Mt Gox will release the BTC really soon, while others are calling the rumors “fake news.” Despite any veracity of the Mt Gox coin chatter, there are hundreds of tweets discussing the subject on Twitter. Here’s why you should care
Also, regulatory uncertainty continues as no crypto bill is expected to pass before the US midterm elections and markets wait to see the electoral outcome of the House and Senate. Proposed bills such as the bipartisan Lummis-Gillibrand “Responsible Financial Innovation Act” seem to have made their way to the sidelines because of this.