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 the biggest catalyst for this wave of market conditions.
Powell appeared before the House Financial Services Committee for questioning on Wednesday. When he responded to Congressman Maxine Waters's question about whether stablecoin issuers should be licensed and regulated by the Federal Reserve, he responded: "The Federal Reserve does view stablecoins as a form of currency, but in all developed economies, the ultimate source of monetary credibility is still the central bank." In addition, Powell also said that Bitcoin has staying power as an asset class, which really surprised the market. Because regulators such as Powell have been worried about the volatility and potential risks of cryptocurrencies, this statement means that policymakers are beginning to recognize the role that digital assets may play in the future. This is a positive signal and is seen as a shift in regulatory stance, making more institutional and individual investors feel at ease with the cryptocurrency market, thereby driving up Bitcoin prices and market capitalization.
Jim Wyckoff, senior technical analyst at Kitco, said that Bitcoin's rise has led to a surge in July Bitcoin futures prices, noting that futures prices hit a six-week high in early U.S. trading on Wednesday. He analyzed: "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. Bulls have strong momentum and are looking for more upside." Markus Thielen, head of research at Matrixport, explained: "Since early January, Bitcoin has been trading above its 200-day moving average, a level that market participants often use to determine whether an asset is in a bull market (above) or a bear market (below). After the U.S. banking crisis in March, Bitcoin traded back to this 200-day level, but successfully rejected it, and we are still in a bull market."
With inflation in the U.S. "much higher" than it should be, further rate hikes are likely in the future. Since last year, talk of a possible future rate hike has had a somewhat negative impact on the cryptocurrency market, causing prices of digital assets such as Bitcoin to fall. But now Powell says that the level of interest rates and the speed of rate hikes are separate. Speed was important in the early stages of the process, but it's less important now. A moderate increase in 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 moderate pace.
At the same time, as traditional financial giants gradually enter the crypto market and launch crypto trading platforms, trust funds, and apply for Bitcoin ETFs and other products, these initiatives will bring more liquidity and trust to the crypto market, attract more institutional investors and professional investors to enter the market, and enhance the transparency and stability of the market. More funds will also enter the crypto world through the bridges built by traditional institutions. In this context, although the Fed's interest rate hike may have a negative impact on the crypto market in the short term, this impact may weaken in the long run. The crypto market has gradually become an important asset class, and more and more institutional investors are recognizing its potential and value. In the future, they may continue to inject more funds to make the crypto market continue to grow and develop.
One KOL even said that the Fed and the cryptocurrency world are no longer directly related, because mainstream institutions influenced by the Fed's sentiment withdrew from the cryptocurrency world last year. Now it is a dark forest. For Bitcoin, Powell has no say, the exchange bosses have the final say, and the dog dealers have the final say. The rise and fall all depend on needs. Summary Recently, the crypto market has experienced the influence of multiple positive factors, including the entry of traditional financial institutions into the market and the positive comments on Bitcoin by Fed Chairman Powell. Although the Fed's interest rate hikes once had a negative impact on the crypto market in the past, at present, this influence has weakened. As more and more institutions and investors enter the cryptocurrency market, the recognition and use of cryptocurrencies will continue to increase, which may promote the long-term stability and maturity of the market.