Bitcoin price rises to $23.3K as Fed repeats “disinflationary process” has started in economy

By Selena On Feb 8, 2023

After U.S. Federal Reserve Chairman Jerome Powell stated overnight that the “disinflationary process” had started in the economy, Bitcoin price went back above $23,000. At the time of writing, BTC is changing hands at $23,336.

BTC/USD 4-hour chart | Source: TradingView

Bitcoin price rises above $23,000 as Fed says ‘disinflation’ started

Even if the “disinflationary process” has begun, it will be some time before the U.S. Federal Reserve is prepared to declare triumph in its battle against increasing prices, according to Jay Powell, who was speaking about the economy with David Rubenstein, co-founder of the Carlyle Group.

As soon as the interview began, Rubenstein asked whether last Friday’s astronomical jobs report (517,000 new jobs) would have affected the Fed’s choice to raise its benchmark Federal Funds rate by only 25 basis points two days earlier. Powell claimed that it was unlikely that the news would have changed anything.

When Powell declared that the “disinflationary process has started” at his post-meeting news conference last week, traditional markets and BTC rose dramatically. On Tuesday afternoon, he continued to use that language while emphasizing that the process was starting and that additional rate increases would be required.

Overall, it’s difficult to interpret Powell’s statements as dovish. Still, since this was the Fed chair’s first opportunity to speak in public after Friday’s jobs report, investors may have anticipated a more hawkish slant. Nevertheless, since the interview started, Bitcoin has gained roughly $300 and is currently trading at $23,300.

💸 #Bitcoin‘s existing supply continues moving to self-custody as prices range at $23k here in early February. There is now $416.5B in $BTC sitting away from exchanges, and $29.2B in $BTC on exchanges. So there is 14.26x the coins off exchanges vs. on. https://t.co/MU4UAUY5Mv pic.twitter.com/oZYoSf6tgY

— Santiment (@santimentfeed) February 7, 2023

Bitcoin transactions to and from cryptocurrency exchanges have decreased, indicating that market sentiment is still cautiously bullish. Over the past year, Bitcoin has increased by around 38% and by 44% over the past 90 days. Many traders could make money as a result. For bullish investors, the lack of a dramatic increase in BTC deposits to exchanges should be positive.

“February hasn’t seen a repeat of excitement for Bitcoin & Ethereum like we saw in January. But altcoins like HEX (+64%), TMG (+70%), and GRT (+66%) have had other plans this past week. Be cautious, though, when money is cycling into mid/small caps without top cap rising”, Santiment reported.

The remarks supported the ascent of Ether and the other top 10 non-stablecoin cryptocurrencies as well as the U.S. equity markets. Powell acknowledged that other interest rate increases might be required, but the markets interpreted his words to mean that last year’s rate increase won’t happen again in 2023. Polkadot made the biggest jump, and Polygon was right behind it.

Ether increased by 3.4% to $1,671 and 5.4% over the previous week. For a weekly gain of 10.8%, Polkadot increased by 6.8% to $6.94. To reach $1.27, Polygon increased 6.6%, gaining 14.2% for the week. The Dogecoin clone has had a solid week and is up 21.78% over the previous seven days, while the Shiba Inu meme coin increased a less impressive 1.9% to trade at $0.00001439.

Following Powell’s remarks on inflation and interest rates at an appearance at the Economic Club of Washington, it was a turbulent trading day, albeit markets ended close to session highs. “The disinflationary process of getting inflation down, has begun, and it’s begun in the goods sector, which is about a quarter of our economy,” said Powell. “But it has a long way to go. These are the very early stages.”

When Powell announced the Fed was raising interest rates by 25 basis points last Wednesday, he made similar remarks about inflation. Since then, unexpectedly positive jobs data revealed last Friday have led some investors to question this conclusion, shaking the cryptocurrency and equity markets in recent days.

The entire trading volume increased by 25.4% to $60.2 billion, increasing the market value of cryptocurrencies by 1.8% to $1.08 trillion.

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