In just one night, the price of bitcoin, the world's largest cryptocurrency, broke through the key resistance level of $30,000, reaching as high as $30,800, the highest price since April 2023. The testimony of Federal Reserve Chairman Powell was actually the biggest catalyst for this wave of market sentiment.
Powell appeared before the House of Representatives Financial Services Committee for questioning on Wednesday. When he responded to Congressman Maxine Waters asking whether stablecoin issuers should be licensed and regulated by the Federal Reserve, he responded: "The Fed does see stablecoins (stablecoins) as a form of currency . But in all advanced economies, the ultimate source of currency credibility remains the central bank. ”
In addition, Powell also said that Bitcoin has staying power as an asset class, a comment that did surprise the market. Because regulators such as Powell have been worried about the volatility and potential risks of cryptocurrencies before, this statement means that policymakers are beginning to recognize the role that digital assets may play in the future. The change in stance has made more institutional investors and individual investors feel at ease in the cryptocurrency market, thus driving up the price and market value of Bitcoin.
Jim Wyckoff, senior technical analyst at Kitco, said bitcoin's rally led to a surge in bitcoin futures in July, noting that futures hit a six-week high in early U.S. trading on Wednesday. He analyzed: "The bulls have gained solid strength recently and now have the overall near-term technical advantage, as the price downtrend on the daily bar chart has been negated. The bulls have strong momentum and are looking for more upside."
Markus Thielen, director of research at Matrixport, explained: “Since early January, Bitcoin has been trading above its 200-day moving average, a level that market participants typically use to judge whether an asset is in a bull market (above) or a bear market (below). March Bitcoin traded back to this 200-day level after the U.S. banking crisis, but managed to reject it, and we're still in a bull market."
With U.S. inflation "well above" what it should be, further rate hikes are likely in the future. Since last year, remarks about the possibility of future interest rate hikes have had a certain negative impact on the cryptocurrency market, leading to a decline in the price of digital assets such as Bitcoin.
But now Powell said that the level of interest rates and the pace of rate hikes are separate. Speed was important in the early days of the process, not so much now. Moderately raising interest rates may be a reasonable decision. We are now moderately slowing down that pace. Perhaps it makes sense to raise interest rates at a more modest pace.
At the same time, as traditional financial giants gradually enter the encryption market and launch products such as encryption trading platforms, trust funds, and applications for Bitcoin ETFs, these moves will bring more liquidity and trust to the encryption market and attract more More institutional investors and professional investors enter the market, which also enhances the transparency and stability of the market, and more funds will also enter the encrypted world through the bridge built by traditional institutions.
Against this backdrop, while the Fed’s rate hikes may have a negative impact on the crypto market in the short-term, the effect may be lessened in the long-term. The encryption market has gradually become an important asset class, and more and more institutional investors are realizing its potential and value, and may continue to inject more funds in the future, making the encryption market continue to grow and develop.
One KOL even said that the Federal Reserve and the currency circle are not directly related, because the mainstream institutions affected by the sentiment of the Fed have withdrawn from the currency circle last year, and now it is a dark forest. For Bitcoin, Powell’s words don’t count, and the exchange boss said Forget it, Gou Zhuang has the final say, ups and downs, it all depends on the needs.
Summarize
Recently, the encryption market has experienced the impact of multiple positive factors, including the entry of traditional financial institutions into the market and the positive evaluation of Bitcoin by Federal Reserve Chairman Powell.
Although the Fed’s interest rate hikes had a negative impact on the crypto market in the past, this influence has weakened so far. As more institutions and investors enter the cryptocurrency market, the acceptance and usage of cryptocurrencies will continue to increase, which may drive long-term stability and maturity of the market.