Bitcoin price holds at $26,100 range ahead of Jerome Powell’s Speech at Jackson Hole Symposium
- Bitcoin price is stuck in the $26K range, auctioning at $26,119 at the time of writing.
- The stagnation comes ahead of Fed chair Jerome Powell’s speech in Wyoming.
- The market is ready for the event, with a central focus on the trajectory of inflation and how it would influence interest rates.
After triggering an impulse across the cryptocurrency market with a small but steady rise, Bitcoin price has reached a traffic jam and is now stuck around the $26,000 range. It comes ahead of the Jackson Hole symposium, infamous for its impact, causing stocks to fall in 2022.
Bitcoin price stalls ahead of Jackson Hole symposium
At the time of writing, Bitcoin (BTC) price is $26,119, after dipping into the demand zone between $26,048 and $24,919. With this order block holding as a support level, one would expect aggressive buying from the bulls location within the aforementioned range. However, it appears traders are playing it safe, with all eyes peeled and ears set for the Wyoming meeting, as Jerome Powell will speak on August 25 at 14:05 GMT. The meeting started on Thursday, August 24.
BTC/USDT 1-day high
If history is enough to go by, Bitcoin price could react negatively to the speech, as it has happened across 2018-2022, dropping within the 3.5% to 10.5% range. Nevertheless, it all depends on the Fed’s stance on inflation, with BTC expected to respond accordingly.
Specifically, if Powell takes a hawkish stance, it would sweep the crypto market, potentially sending BTC below the psychological $25,000. On the other hand, if he takes a less hawkish stance, the market could rally, potentially setting the tone for BTC to claw back above the $28,722 level.
Obviously, the more desirable outcome would be a dovish stance, with crypto proponents already biting their nails after months of consolidation followed by a steep crash on August 18. Once Powell takes the stage on Friday, traders will be looking for signs of easing hawkishness from his expressions.
As early as now, however, the trajectory of inflation in the US is mainly apparent, maintaining a steady drop. This tilts the balance in favor of a possible dovish stance, but this is pending confirmation. Nevertheless, it remains to be seen whether the decline in inflation will call for a more measured or assertive approach to interest rate control.
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US annual inflation trajectory
Still, Powell’s approach moving from a relatively strict stance to a more delicate ground has not escaped the eyes, especially after the agency’s desire to hit the 2% target still lives on. As he takes the podium tomorrow, one thing will be clear in his mind: to manage inflation will not necessarily demand job cuts.
On the other hand, to maintain current financial conditions, the Fed may have to avoid rate cuts, which would leave the market in suspense with possibilities of potential rate hikes, should things change. Noteworthy, this bolsters the Fed’s plans with the market’s concept of “higher for longer.”
Fed Expected To Drill In 'Higher For Longer' In Jackson Hole
— *Walter Bloomberg (@DeItaone) August 24, 2023
Fed Chair Powell's Jackson Hole speech is unlikely to bring new elements to the US monetary policy outlook, says Julian Brigden, from Macro Intelligence 2. "They will keep holding out their powder because they don't…
Therefore, while the speech may not bring forth new elements, it is likely to underscore the cautious approach employed by the central bank. Macro Intelligence 2 authority Julian Brigden holds the same opinion, believing that Powell’s speech will likely emphasize on the central bank’s cautious approach rather than introducing new elements. This points to the likelihood of avoiding rate cuts to maintain current financial conditions.
A situation where the Fed calls for a slowdown in inflation, thereby signaling that interest rates need not be lifted, would bode well for risk-on assets like cryptocurrencies, with Bitcoin likely to lead the pack north.
Also Read: Bearish crypto markets fear hawkish Powell at Jackson Hole: scenarios for Bitcoin
Open Interest, funding rate FAQs
How does Open Interest affect cryptocurrency prices?
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
How does Funding rate affect cryptocurrency prices?
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
