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Bitcoin swung upwards with stocks but then settled lower following Federal Reserve Chairman Jerome Powell’s comments that the central bank is beginning to get inflation under control. Powell cautioned, however, that it will take a long time to fully tame inflation.
The digital asset first rose when the U.S. central bank chief spoke at the Economic Club of Washington, D.C. Tuesday and said that inflation would drop lower.
But then its price dropped: it is currently trading hands for $22,937, according to CoinGecko—a 0.2% 24-hour drop. In the past hour, it’s down 2.8%.
The largest cryptocurrency by market cap did what it usually does and rose with U.S. equities: the S&P 500 and Nasdaq are now down following Powell’s comments that it will take time to bring inflation under control.
Answering questions from asset manager Carlyle Group’s co-founder David Rubenstein at the event, the Fed boss said that “it’s not at all guaranteed” that inflation will “go away easily and painlessly.”
“This process is likely to take quite a bit of time,” he said. “It’s not going to be smooth.” He added that “the biggest challenge we face at the Fed is getting inflation down to 2%.”
But Powell did say that this year there would be “significant progress on inflation,” which is good news for traders dealing with “risk-on” assets, such as Bitcoin.
The Fed started aggressively raising rates last year in an attempt to control 40-year high inflation, first by hiking them by 75 basis points four times—which negatively impacted the value of stocks, equities and crypto.
It then slowed down by raising rates by only 50 basis points and most recently by 25 basis points.
The crypto market has been battered with U.S. equities—particularly tech stocks—as traders have shifted risk and instead retreated to the dollar as the Fed has pursued an aggressive monetary policy to get inflation down to 2%.
But as the Fed changes its posture, markets have begun to spring back to life. Bitcoin is up more than 35% in the last 30 days.