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 percent 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 yesterday, despite Powell unveiling a strategy to allow inflation to run higher than the 2 percent 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 percent 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.
- “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.