Bitcoin (BTC) price broke the $24,000 ceiling and the total crypto market cap surged nearly 4% after Federal Reserve Chair Jerome Powell indicated inflation had started in the world’s largest economy to slow down.
“We can now say, I think for the first time, that the disinflation process has started […] we’re really seeing it in commodity prices,” Powell said during a Federal Open Market Committee news briefing on Feb. 1, shortly after announcing a 25 basis point rate hike.
The rate hike and Powell’s remarks appeared to have gone down well in crypto markets, which had traded sideways leading up to the speech but saw the market cap surge by over $40 billion in the hours following the announcement.
Market cap of cryptocurrencies from February 1st to 2nd. Source: CoinMarketCap
The global crypto market cap now stands at $1.09 trillion, up 3.88% over the last day, according to the latest figures from Coinmarketcap.
Meanwhile, BTC toppled just over $24,000 for the first time in 2023, hitting $24,161.27 according to Coinmarketcap.
Related: Bitcoin bulls plan to flip $23,000 to support by aiming to win this week’s $1B options expiry
That being said, Powell said they still expect service sector inflation to keep rising for some time to come and they will be prepared for “continued rate hikes”.
“We see ourselves in it with more sustained inflation [services] Sector that takes longer to come down and we have to get the job done. That is why we are here.”
Powell noted that “ongoing rate hikes” are still appropriate as the Federal Reserve seeks to bring inflation back to its 2% target.
Fed Reserve increased by 0.25%. It’s the 8th hike. The Fed has not announced the end of its hiking cycle. But the Fed chair said in his speech that he sees inflation coming down soon. 50% of inflation is in the “disinflationary” phase. The markets are reacting positively. #FOMC #Fed #asx $spx $ndq $xjo pic.twitter.com/1misOrnD2b
— Jessica Amir (@JessicaDAmir) February 1, 2023
It should be noted that disinflation refers to a slowdown in the rate of increase in the general price level, in contrast to deflation, in which the general price level of goods and services falls.