Jerome Powell’s recent statements did not shock the markets as anticipated, following the decline of DeepSeek. Investors were relieved as the feared scenario did not materialize. The drop in technology stocks could have intensified if Powell’s remarks had been more severe. What does the current situation indicate for cryptocurrencies?
Powell and Cryptocurrencies
A key takeaway from Powell’s comments was that expectations for continued interest rate cuts should not rely on a dip in inflation to 2%. He hinted that indications of falling annual inflation or weakness in employment could heighten expectations for rate cuts. If we see favorable surprises akin to recent core inflation data, market expectations for cuts this year could increase.
On another front, Trump’s initiatives to curb inflation have begun to lower energy prices, anticipated to reflect in monthly inflation rates. Additionally, Powell’s tone towards cryptocurrencies has become more moderate compared to his previous strategic Bitcoin 
$105,772 reserve remarks.
Economic Comments
Powell noted that interest rates are currently much less restrictive compared to pre-last year’s cuts, emphasizing that they will not rush to adjust their policy stance. He highlighted his optimism regarding continued deceleration in inflation over the coming months.
Richard Clarida, who served as Powell’s deputy from 2018 to 2022, remarked that the goal of the December meeting was to maintain minimal action options for 2025, something they achieved. We are seeing this overly restrictive stance relax, which is advantageous for cryptocurrencies since the worst is already priced in.
Should we observe improvements in inflation data, the first move for interest rate cuts could arise as early as May. As this article was prepared, the total value of cryptocurrencies rose to $3.53 trillion, with trading volume remaining above $100 billion. ETH continues to hover around $3,100, while many experts suggest that BTC closing above $104,000 could signal new highs.
