Crypto Market Crashes After Comments from the Fed Chair

Since the start of the day, the crypto market has been flashing red as Fed Chair Jerome Powell maintains his hawkish stance on inflation and monetary policy. Meanwhile, the S&P 500 finished the day down 3.4%, its lowest level since late July. The Nasdaq Composite Index fell 4%, following the trend. Following the most recent Federal Reserve policy announcement, US stocks and crypto assets are falling everywhere.

In a recent speech at the Federal Reserve’s annual conference in Jackson Hole, Chairman Jerome Powell stated that the central bank’s primary goal is to return inflation to 2% and that the central bank has no immediate plans to lower interest rates. The total market capitalization of all cryptocurrencies fell by 3.19% to $964.24B the previous day. The cryptocurrency market volume has decreased by 16.62% in the last day, bringing the total volume to $70.84B.

Speech by Chair Powell on the economic outlook: https://t.co/a7oRBw533P

Watch live: https://t.co/4AjHPi6hX8

— Federal Reserve (@federalreserve) August 26, 2022

Hawkish Fed Chair – Bitcoin and Ethereum’s Demise

Several major cryptocurrencies fell sharply as traditional markets fell after Fed Chair Jerome Powell maintained his hawkish stance on inflation and monetary policy. The most valuable cryptocurrency, Bitcoin (BTC), fell further today and hit a monthly low of $19,907 and has not fallen below $20,000 since July 14. Several cryptocurrencies, including Dogecoin (DOGE), XRP, Cardano (ADA), Ethereum (ETH), and XRP, experienced significant price drops.

Since November 2021, the market value of Bitcoin has fallen from around $1.27 trillion to around $383 billion. It fell 6.4% in the previous week. However, Ethereum’s market capitalization has dropped from around $400 billion to around $180 billion. Furthermore, the other major cryptocurrencies by market capitalization did not appear to be faring any better.

According to CoinMarketCap, the price of XRP dropped to $0.3217, that of Cardano (ADA) to $0.4279, and that of Solana to $30.15. Cardano and Solana hit new lows last year, while XRP was still hovering around its 365-day low of $0.31 in June 2018.

Stock Market Drops amid Hawkish

Following the Federal Reserve’s hint that interest rates may begin to rise sooner than expected, the US stock market suffered near-9% losses. The rest of the market’s decline was also triggered by Powell’s remarks at the annual economic conference of the Fed.

The S&P 500, Nasdaq, and Dow closed lower than 3% due to unfavorable stock and cryptocurrency market reactions. Insiders predict that the chairman of the Federal Reserve System will raise the benchmark interest rate by 75 basis points at the next meeting.

Dollar Recovery

The broad-based US dollar halted its previous losses. It hit a 20-year high against other major currencies on Monday, following Jerome Powell’s announcement that interest rates would be higher for longer to combat out-of-control inflation.

Meanwhile, the US dollar received additional support from its safe-haven appeal, which was boosted after US stocks fell sharply.

“Typical Crypto” Rumors about Mt. Gox

The weekend’s lack of market liquidity added anxiety to an already tense scenario. Speculation that the creators of the defunct exchange Mt. Gox would distribute the remaining cash to creditors on August 28 prompted a sell-off. Traders have made various statements in the past about a sizable quantity of Bitcoin being readily available. Some say the team might release most of the money at once, while others say they’ll do it in smaller increments.

Despite the different allegations concerning the availability of a major portion of Bitcoin, analyst Josh Rager stated that the selling pressure caused by releasing the entire hoard would not result in a doomsday scenario.

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