Jerome Powell, the chairman of the Fed, has been influencing crypto from 2018 to the present with the most important role on global monetary policy and will continue to do so until 2026.
Summary
Employment data as food for thought
The cost of money is influenced by the monetary policy decisions of Jerome Powell’s Federal Reserve, but in addition to money, crypto assets are also affected by this influence.
Following his last speech on the sidelines of the first FOMC meeting of 2023, which sanctioned yet another 25 basis point rate hike, Jerome Powell had not spoken publicly since.
Since the second week of January, the president of the central bank had not spoken publicly despite the fact that very important data came out that provide insight into the health of the country’s economy.
The data on US employment showed a decidedly tonic world of work despite the pressure of inflation (albeit downward) and aggressive monetary policy.
Jobs report showed that jobs in America grew by 517,000, an extraordinary figure that could have affected Powell’s choices.
The opportunity to ask whether or not this data could affect the scope of the rate hike was presented to him in a chat with Carlyle Group co-founder David Rubenstein.
According to Powell, the figure would not affect the decision made because the deflationary process is still in progress and far from over.
Following the president’s words in the first public speech after the employment report on 3 February, a strong reaction from the markets was expected.
The response failed to happen both on Wall Street (Nasdaq +1.5%, S&P 500 +1.1% and 10-year Treasuries below 4%) and on the crypto side, with BTC appreciating by an additional $300.
Jerome Powell: how monetary policy choices affect crypto
As explained in a previous article, monetary policy choices affect not only the dollar and markets but also crypto, especially Bitcoin.
The US dollar is the most important currency globally, the most used for international trade and also to reference the price of BTC itself.
However, BTC was created to counter the power system of fiat currencies, central banks and inflation (Halving).
Expansive policies (quantitative easing) positively affect the price of BTC.
Immediately following Bitcoin’s last Halving, the crypto world saw the digital currency make its all-time high precisely during a period of expansive policy.
The expansionary policy plan of Jerome Powell’s Federal Reserve affected the price performance of BTC and consequently the other trailing crypto assets more than anything else.
The central bank’s choice of a plan to inject liquidity into the market was actually influential in triggering the bull run around the time of the events.
Jerome Powell: the Fed’s latest intervention and the impact on the crypto market
On 10 January, the Fed met to decree the first rate hike of 2023. Yet another step in the fight against one of the great evils of our time: inflation.
As reported in a The Cryptonomist article, Jerome Powell at the microphones of the Riksbank International Symposium had hinted that he would continue the aggressive policy to fight the cost of money this year.
According to Chairman Powell, the Fed’s action cannot and should not stop no matter what happens in the world. Rates will rise at least until they reach 5%.
In 2023, the Fed’s monetary policy plan calls for four FOMC meetings with as many announcements of interest rate changes.
The coming year will also be affected by inflation-related choices. Powell expects more hikes until the cost of money is in the “normal” range of 2%.
Four more years at the Fed’s helm
Last May, acting Chairman Jerome Powell received a second appointment to serve in the role for another four years (up to and including 2026).
This entails interference in the crypto world and the US economy at several important appointments including the upcoming Halving of BTC.
Even though the inflation problem was initially underestimated by several parties. Powell has handled the issue with an iron fist and this, combined with the results he is achieving. Have earned him the reappointment.
Although there has been no shortage of friction. With 80 votes out of 99 total, the US Senate reappointed Jerome Powell to the reins of the US central bank last year.
Following the US Senate vote, Joe Biden said:
“I want to thank the Senate for confirming Jerome Powell, Lisa Cook and Philip Jefferson this week, adding to the recent confirmation of Lael Brainard. The Federal Reserve plays a primary role in fighting inflation, and these skilled board members will bring the skills and knowledge needed at this critical time for our economy and for families across the country.”
