Bitcoin (BTC) and altcoins lost big on Aug. 26 after the United States Federal Reserve delivered hawkish remarks on economic policy.
Across the board, risk assets took a major hit — U.S. equities shed around $1.25 trillion in a single session.
Analyst: Powell retiring “soft landing” rhetoric
As comments by Fed Chair, Jerome Powell, suggested that larger rate hikes were still firmly on the table despite recent data hinting that inflation was already slowing, investors rushed to cut risk.
“Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy,” Powell said at the annual Jackson Hole economic symposium.
The S&P 500 closed down 3.4% on the day, hitting its lowest levels since late July. The Nasdaq Composite Index copied the move and extended losses, shedding 4%.
Overall, the U.S. stock market lost more value than the entire market cap of Bitcoin and altcoins combined.
The total crypto market cap itself fell from $1.029 trillion to $936.87 billion at one point overnight, representing a drop of 8.95%, according to data from Cointelegraph Markets Pro and TradingView.
Total crypto market cap 1-day candle chart. Source: TradingView
While some argued that Powell’s words were not the essential area to consider in terms of future Fed policy, others noted that previous narratives were slowly being abandoned when it came to the inflation outlook.
Stop focusing on what JAYPOW says, and focus on what he does. pic.twitter.com/tGf82VPkGF
— Arthur Hayes (@CryptoHayes) August 26, 2022
Holger Zschaepitz, popular markets commentator for German media publication Die Welt, considered the speech to have hit “all the hawkish notes” with Powell “skipping the dovish ones.”
“The hawkish features were his acknowledgment of the pain that is likely needed to reduce inflation – no more soft landing, the indication that rates will need to be taken above neutral,” he added in part of Twitter comments.
Powell also said that the decision over how far to extend key interest rates in September would “depend on the totality of the…