Dollar Strengthens, Cryptocurrency Retreats After Powell's Statement
The crypto market declined on Wednesday, as the US dollar strengthened and Treasury yields surged above 4% after Fed Chairman Powell warned that a December interest rate cut was not a certainty, despite the Fed's 25 basis point rate cut to a target range of 3.75–4.00% and its decision to end balance sheet reduction in December.
Rising US bond yields have made riskier assets like crypto less attractive to investors, who are turning to instruments that offer higher yields. Meanwhile, a strengthening US dollar has also put pressure on crypto prices, as many investors seek refuge in more stable assets.
Bitcoin, the largest cryptocurrency, traded below $112,000, down more than 2% on the day. Ether, under similar pressure, also fell more than 2% to around $3,900, although it was still boosted by positive sentiment from the DeFi and NFT sectors. Crypto investors now face global macroeconomic uncertainty, with interest rate policies and inflation developments being major determinants of digital asset price movements.
Despite this, demand for digital assets remains strong, driven by the growing adoption of blockchain technology. Many large companies continue to enter the crypto space, although short-term prices remain pressured by global economic factors. Going forward, cryptocurrencies are expected to remain influenced by the Fed's decisions and broader global market dynamics.
Source: Newsmaker.id
