Vitalik Buterin timed the market’s next leg-down perfectly, selling up to $700,000 worth of shitcoins right before chair of the Federal Reserve, Jerome Powell testified in front of the Senate Banking Committee and rattled the markets.
Yesterday, Powell reminded everyone that the Federal Reserve will keep interest rates higher for longer than investors were expecting, and in addition, confirmed that it may also raise interest rates even higher than 5%. The current Federal Funds rate rests just above the 4.5% mark.
Powell’s testimony may have poured cold water over the dominant markets’ narrative which saw the year begin with a furious rally and one of the largest short-squeezes in recent history. The rally in question was largely driven by the narrative that អតិផរណាបានឡើងដល់កំពូល and that the Fed was going to pivot later this year.
The comments brought down stock and crypto markets. More than 69% of the trades in CME Interest Rates Futures bet that at the next Fed meeting, the interest rate will be raised by 50 basis points or more. Once again, Powell reiterated that inflation may stay elevated and that despite an economic slowdown, the job market was still very strong with an unemployment rate of 3.4% (the lowest since 1969). This clearly demonstrates that the Fed’s job to bring down inflation is far from complete.
He also argued that inflation was running lower than in the second half of last year but it’s higher than the latest Fed meeting. However, Powell also reminded his listeners that the Fed’s actions also have a lag in the system, meaning that it takes time for interest rate increases to affect the economy. To drive his point home, Powell said, “The road to inflation will be a long and bumpy one.”