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Reactions of Cryptocurrency Markets to Fed Rate Announcements

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by Giorgi Kostiuk

2 hours ago

Recent Producer Price Index (PPI) data has caused a significant decline in the cryptocurrency market. Bitcoin and Ethereum prices have shown volatility in light of ongoing discussions regarding Fed monetary policy changes.

Cryptocurrency Market Following PPI Data

Bitcoin (BTC) has dipped to $119,000, with over half a billion dollars in long positions liquidated. Ethereum (ETH) fluctuates around the $4,700 mark. Rate cut expectations from the Fed slightly decreased but remain high.

Fed Rate Cut Expectations

Despite the support for rate cuts from five Fed members, two previously expressed caution regarding this issue. The situation could become more complicated should contradictory statements emerge from other members.

Inflation appears to be hovering around 3%. Tariffs impact inflation, and their effect could diminish within 6 to 9 months but might persist longer.CITE_W_A

Musalem's Insights

Musalem, voicing his concerns, noted that the labor market remains at full employment, albeit with signs of weakening. He suggested that it is reasonable to expect the equilibrium point for labor costs to be below 50,000.

If the Fed aggressively cuts rates considering the labor market, it could raise inflation expectations and cause an adverse effect.CITE_W_A

Overall trends in the cryptocurrency market will depend on further statements from Fed members and the evolving economic landscape. Insights into monetary policy and its influence on cryptocurrencies will remain a focal point for investors.

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