'Hawkish' Powell... Bitcoin collapses below $110,000

Crypto Now

Powell draws a line on a December rate cut

Reduced preference for risky assets such as crypto

Falls to $106,000 in two weeks

Jerome Powell, chair of the U.S. central bank (Fed), made 'hawkish' (preference for tighter monetary policy) remarks, and Bitcoin ceded the $110,000 level. Analysts say uncertainty over monetary policy has dampened risk-asset investor sentiment, increasing Bitcoin price volatility.

According to CoinMarketCap on the 2nd, Bitcoin's price fell about 1.5% over the past week. Compared with a month ago, it fell about 4.2%. On the 27th of last month it rose above $115,000, but the downtrend intensified from the 29th, two days later.

It was Powell's remarks that pulled down Bitcoin's price. At last month's Federal Open Market Committee (FOMC) meeting, Powell made unexpectedly hawkish comments, drawing a line under expectations of a December rate cut. As a result, the probability of a rate hold in December on the Chicago Mercantile Exchange (CME) FedWatch briefly jumped from the 9% range to the 70% range. Cryptocurrency analytics firm SwissBlock said, "Powell's remarks have dampened risk-asset preference sentiment," and "if downward pressure accelerates, a 'risk-off' (preference for safe assets) signal could ignite, triggering another round of selling."

The U.S.-China summit also failed to spark a rebound. Rather, Bitcoin's price fell after the summit, sinking to around $106,000 in about two weeks. On-chain analytics firm Glassnode explained, "(Bitcoin) long-term investors' profit-taking has continued, leaving the market in an unstable state."

There are also views that Bitcoin's price could be pushed down to the $80,000 range. Glassnode presented $88,000 as the realized price of major Bitcoin investors if Bitcoin fails to secure upward momentum. The realized price refers to the average purchase price of all investors. U.S. crypto-focused media outlet CoinDesk said, "The panic phase has passed, but market recovery depends on the restoration of investor confidence."

Lee Jun-hyung, BloomingBit reporter gilson@bloomingbit.io