Fed’s ‘Critical’ Warning Triggers Warning of Severe $50K Bitcoin Price Crash as $200 Billion Wiped from Ethereum, XRP, Solana and Crypto

Update from July 4th below. This post was originally published on July 3rd.

Bitcoin
Bitcoin
has suddenly crashed back to $60,000 per Bitcoin after a billionaire Bitcoin buyer announced that he had switched to Bitcoin.

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Bitcoin price has struggled over the past month, falling nearly 15% as fears of a “real correction” arose.

After one of the biggest Bitcoin bulls said the cryptocurrency could eventually replace the US dollar, US Federal Reserve Chairman Jerome Powell warned of a “critical period” for the Fed, calling deficit levels “unsustainable”.

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ForbesFollowing the collapse in cryptocurrency prices, a “groundbreaking” Bitcoin bill has been submitted to CongressFrom Billy Bambrough

“Our debt levels are entirely sustainable, but the path we are on is not sustainable,” Powell said during the European Central Bank’s Portugal conference, as the Financial Timesadding that the Biden administration is taking excessive risks by “running a very large deficit at a time of full employment,” and said “you can’t sustain those levels for very long in good economic times.”

In May, Treasury Secretary Janet Yellen issued a stern warning about the rising $34 trillion U.S. debt pile, which some believe could help drive the price of Bitcoin to $1 million in the next 18 months.

Bitcoin, crypto and stock market traders have been closely watching the Fed for signs of a rate cut in recent months, with analysts having to scale back their expectations from around seven rate cuts in 2024 to just one or two.

“Finding the right balance in monetary policy at this critical time is what I am thinking about in the early hours of the morning,” Powell said in response to a question about his biggest concerns, the AP reported.

Update 7/4: Bitcoin price and the crypto market have suffered a severe crash over the past 24 hours, with Bitcoin price falling well below $60,000 and the combined crypto market losing $200 billion since July 1. Ethereum and the rest of the mainstream market have fallen more than Bitcoin, with Ethereum competitor Solana, Telegram-linked Toncoin and meme-based Dogecoin all down nearly 10% since yesterday.

“Bitcoin breaks through significant technical and psychological levels at $60,000,” wrote Markus Thielen, founder of 10x Research, in an emailed comment.

“This is a key level for Bitcoin miners and Bitcoin ETF (exchange traded fund) buyers, and also broadly marks the floor (support) of the three-month trading range. The price decline could accelerate if the support is broken and sellers scramble for liquidity. Only ill-informed traders are willing to buy here. A break of this support could cause a sharp decline to below $50,000.”

Last month, the Federal Reserve left interest rates unchanged and signaled that it would make just one cut in 2024, with more to follow in 2025. The Fed has come under pressure to cut rates after raising them at a record pace in the wake of massive Covid-era stimulus spending and money printing that sent inflation spiraling out of control.

“Powell said the U.S. is back on a ‘disinflationary path,’ but added that more data is needed before the Fed can consider cutting rates,” said Russ Mould, investment director at AJ Bell, in an emailed comment. “The latter sentence sounds a bit like a broken record to the market, so the most important part of Powell’s speech was the reference to disinflation, as investors interpreted it to mean there was a stronger case for a rate cut soon.”

Attention now turns to the release of the minutes of the Fed’s June meeting on Wednesday and Friday’s jobs report, which could “cement” expectations of a rate cut in September if it shows a slowdown in hiring.

“A weaker-than-expected employment report on Friday, should it materialise, would likely further strengthen the case for the cut, which markets are giving a chance of around 70% – perhaps a little understated,” said Michael Brown, chief research strategist at Pepperstone, Market observation.

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Forbes‘Replace the US Dollar’ – Legendary Tech Billionaire Makes Shocking Bitcoin Prediction Amid Ethereum, XRP and Cryptocurrency Price FluctuationsFrom Billy Bambrough

The longer-term higher interest rate environment has triggered a warning from analysts at the world’s largest asset manager BlackRock. They spoke of an “unprecedented” scenario that could hit the Bitcoin price and the crypto market.

“We see central banks being forced to keep interest rates higher than pre-pandemic levels to counter ongoing inflationary pressures,” analysts at BlackRock wrote in a report. The firm has helped fuel a bitcoin price boom this year by leading a spot bitcoin ETF revolution on Wall Street.