New Comments From Fed Chair Make BTC, ETH Drop By 6%

The new comments from the fed Chair Jerome Powell that officials should hold off tapering the bond purchase program because of the COVID-19 omicron variant, made BTC and ETH both crash by 6% as we can see in today’s Bitcoin news.

The market troubles from a week ago haven’t settled down. Bitcoin and Ethereum were both down by 6% on Monday according to Coingecko. The previous week ended with the news that Chinese real estate developers Evergrande and Kaisa missed the US dollar bond payment which caused the crypto markets as well as bond markets to crash. The analyst Alex Kruger said that we should be soon seeing the impact of performance fees, audits, wash sales, and bonuses.

However, now the main concern is whether the Federal Reserve will alter the plans to slow down the bund purchase program which should conclude in March instead of in June. The impact of the new comments from the FED chair was apparent in crypto and traditional markets. BTC slid since Friday and it was trading near $47,000, marking a drop of 31% from the previous high of $69,044. Ethereum which was trading near $4000 at the end of last week lost ground over the weekend and was trading at about $3800.

Things looked worse for the other coins in the top 10. Solana’s SOL token was lagging 9% and Cardano’s ADA dropped by 7.5% from the day before. In the meantime, the global crypto market cap was sitting at $2.26 trillion marking a 5% drop in the past day. The exchange-traded products pegged to crypto-assets such as the Grayscale bitcoin trust and Ark Innovation got down by 4% and 3% respectively at the start of the week. Traditional markets are not doing much better as well. The New York Stock Exchange Composite dropped by 124 points from the Friday close.

Up until the end of last week, the economists were saying that they expect the FED to increase the rates of the taper which will mean an early conclusion to the treasury and mortgage-backed bond purchase programs which has been used to prop up the economy that continues to suffer from the COVID-19 effects. Deutsche bank even wrote:

“We expect the Fed to announce a doubling in the pact of tapering at the December FOMC meeting, bringing the monthly drawdown to $20 billion and $10 billion per month for Treasuries and MBS, respectively.”

If that is the case, the purchases will end in March instead of June but now there are signs that the FED officials could be taking the omicron variant virus much more seriously than they did the delta variant. The FED chairman Jerome Powell wrote:

“Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.”