Aug 28, 2020 at 12:16 UTCUpdated Aug 28, 2020 at 13:51 UTC
Federal Reserve building, Washington, D.C. (Steve Heap/Shutterstock)
Bitcoin and gold are reversing losses seen on Thursday after the Federal Reserve’s announcement of a more relaxed approach to tackling inflation sent a tremor across the markets.
- The top cryptocurrency rebounded back above $11,450 on Friday, erasing nearly 70% of the decline from $11,594 to $11,141 that occurred after a speech by Fed Chairman Jerome Powell setting out a new direction for the central bank.
- Gold, too, has risen back to $1,960, having dropped from $1,976 to $1,910 after the event, as per data source TradingView.
- The U.S. dollar gained ground Thursday, despite Powell unveiling a strategy to allow inflation to run higher than the 2% target before raising interest rates.
- However, USD is facing renewed selling pressure at press time.
- The dollar index, which gauges the greenback versus a basket of its main competitors, is currently trading at nine-day lows near 92.35, representing a 0.68% decline on the day.
- The Fed’s new approach means interest rates are likely to remain low for a prolonged period of time – a bullish development for bitcoin and gold, according to experts.
- “Powell’s speech suggests that there is no end in sight [for the Fed’s easy money policy],” John Kramer, trader at GSR, told CoinDesk in a Telegram chat.
- “Powell has shown that there is zero tolerance for deflation so they will do anything to stop it, and that is good for the two hardest assets – gold and bitcoin,” Raoul Pal, founder and CEO of Global Macro Investor and Real Vision Group, tweeted early Friday.
- Put simply, Powell’s speech looks to have strengthened bitcoin’s long-term bullish case.
- While bitcoin has regained some poise, it has yet to cross the descending trendline hurdle, as seen above.
- A break higher would imply an end of the pullback from the Aug. 17 highs above $12,400.
- On the downside, $11,100 is crucial support. That area around that level has consistently restricted losses over the past two weeks.
Also read: Bitcoin Pops and Drops After Powell Introduces Average Inflation Targeting
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