Before the important Fed report, the benchmark cryptocurrency had surpassed $41,000. Nonetheless, Bitcoin started struggling at $40,000 when the Federal Open Market Committee (FOMC) issued its policy statement, which was followed by a press conference led by the Fed’s chairman, Jerome Powell. Why Bitcoin Is Seen Struggling At $40,000 after Jerome Powell’s Press Conference? Fed policymakers kept their monetary policy unchanged at the end of their two-day policy meeting, as analysts predicted. They observed that the US economy has made progress toward its maximum employment and inflation targets and that the Fed would continue to assess its stimulus program in the coming months. Bitcoin investors have been keeping a close eye on how quickly the central bank would end its $120-billion-per-month bond-buying program. This is due, in part, to the benchmark cryptocurrency’s bull run from $4,000 to $65,000 in response to the Fed’s lax monetary policies. Is It Better To Inflate Or Not To Inflate? Powell has stated that the Fed’s asset purchases would continue until the US economy made “substantial additional improvement.” However, the Fed’s news conference on July 28 was the first time it had to clarify what it considers “substantial additional progress.” Powell answered CNBC’s Steve Liesman’s inquiry by saying that it indicates solid labor figures and progress toward full employment. Follow-up inquiries from reporters asked Powell to define the phrase “transitory,” which he and his office had regularly used in prior FOMC announcements to downplay worries about increasing inflation in the United States. Powell spent at least two minutes responding to the unexpected line of questioning, emphasizing that inflation will grow in the short term but not year over year. “[Consumer price] rises are unavoidable. We’re not suggesting they’ll change their minds. As a result, there will be inflation, but the process will come to a halt. […] If it does not affect longer-term inflation expectations, it is unlikely to have any effect on the inflation process in the future. What I mean by transitory is that it has no long-term impact on the inflation process.” According to one observer, Powell was attempting to concede that inflation is not transitory in absolute terms. Another stated that the Fed’s reduction would be in response to improving labor data rather than rising consumer prices. According to some observers, the Fed may be planning another round of lockdowns and stimulus. Bitcoin’s Price Is Struggling At $40,000 Barrier At the time of publication, Bitcoin has fallen below $40,000 once more. Because of its overbought relative strength index (RSI) on a daily timeframe chart, the cryptocurrency is at risk of correcting downward (an RSI reading above 70 typically limits further upside bids for an asset.) Nonetheless, Gustavo De La Torre, business development director at cryptocurrency exchange N.exchange, believes that Bitcoin will experience increased demand in the future as the Fed overlooks inflationary concerns. The analyst described Powell‘s remarks as a “necessary verbal palliative,” noting that investors will now likely protect their holdings in other assets as a cautious measure against continued volatility. According to De La Torre, Bitcoin is one of the few notable options for investors to gamble on a record high. The capacity of the digital asset to attract retail and institutional investors speaks eloquently about its potential to hit a new high. Bitcoin’s price may reach $64,000 by the end of the year if investors flock to the commodity due to inflation worries.
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