The cryptocurrency market is currently volatile amid Jerome Powell’s upcoming speech and March retail sales data. Powell’s tone could dictate market direction; a hawkish stance may lead to declines in risk assets, while a dovish approach might prompt rebounds for cryptocurrencies. Major coins have already seen significant falls, with Bitcoin down over 3% as investors prepare for anticipated volatility and bear market predictions loom.
As the cryptocurrency market sees heightened volatility this Wednesday, the focus turns to Federal Reserve Chair Jerome Powell’s upcoming speech, as well as the March retail sales data release. This event will be pivotal for financial markets, including cryptocurrencies, due to the influence of Powell’s insights regarding interest rates and economic trends.
Jerome Powell is slated to address the Economic Club of Chicago, where he will share his perspectives on the U.S. economic landscape. Any indications of shifts in interest rates, strategies for controlling inflation, or fostering economic growth could significantly impact the broader financial markets, especially the crypto sector.
Should Powell adopt a hawkish stance, suggesting extended high-interest rates, it may exert downward pressure on risk assets, including cryptocurrencies. Conversely, a dovish tone could lead to a rebound in Bitcoin and other digital assets as investors anticipate a decrease in rates.
In preparation for Powell’s statements and the retail data release, traders are anticipating volatility, potentially recognising opportunities for gains. The markets are poised for a test concerning their risk appetite in the upcoming days, whether it leads to a rally or further declines.
In the wake of profit-taking following Tuesday’s market rise, Bitcoin and other major cryptocurrencies experienced significant declines. Bitcoin itself fell over 3%, while XRP, Dogecoin, Cardano, and Chainlink suffered losses exceeding 4%. Smaller tokens such as Pi, Celestia, Bonk, Jasmy, and Flare saw approximately a 10% drop.
Market participants are closely monitoring the March retail sales figures, a crucial indicator of consumer spending amidst economic and inflationary pressures. Analysts from Dow Jones forecast a 1.2% increase from February, which marked a mere 0.2% gain.
Additionally, investors will scrutinise industrial production data and Powell’s speech later today. Analysts at Coinbase Institutional are indicating a potential entrance into a bear market for cryptocurrencies, characterised by substantial losses and stagnation. Bitcoin’s recent plunge below its 200-day simple moving average signals the likelihood of a prolonged downturn.
