Bitcoin took a tumble below $100,000 on Wednesday night, following some not-so-encouraging remarks from U.S. Federal Reserve Chair Jerome Powell about the idea of a national Bitcoin reserve.
Marketwide decline
It wasn’t just Bitcoin feeling the heat, most altcoins also took a hit, with Ethereum slipping 6.5% and XRP plummeting 12.64%.
The GMCI 30 index, which tracks the top 30 cryptocurrencies, fell by 7.18% in the same timeframe.
Bitcoin’s rally was fueled by President-elect Donald Trump’s comments about creating a national strategic Bitcoin reserve, and since then, several states, including Texas and Florida, have even proposed bills to establish state-backed Bitcoin reserves.
Public servant vs. public servant
But now, during a news conference on Wednesday, Powell made it clear that the Fed isn’t looking to hold Bitcoin and has no plans to change any laws regarding this, and his comments put a damper on the optimism surrounding a potential government-backed Bitcoin reserve.
Of course, they say Powell isn’t Trump’s boss, so no one knows what will happen, how reliable Powell’s word.
Arthur Hayes, the former CEO of BitMEX shared that he anticipates a bigger sell-off in the crypto market around Trump’s inauguration in January as investors come to terms with the reality of his limited time to enact any major policy changes.
“The market will quickly realize that Trump has at best one year to make any impactful changes after January 20. This realization could trigger a sharp sell-off in crypto and other stocks linked to Trump.”
Rate cuts vs. productivity
The Federal Open Market Committee decided to cut interest rates by 25 basis points, but Powell hinted that future cuts might slow down, as he described Wednesday’s decision as a closer call than what financial markets had suggested.
The U.S. stock market felt the effects too, with the Dow Jones Industrial Average dropping 2.58%, the Nasdaq Composite down 3.56%, and the S&P 500 losing 2.95%.
