Bitcoin, the largest cryptocurrency by market capitalization, struggled to break past the $27,000 mark as U.S. Federal Reserve Chair Jerome Powell made modestly dovish comments regarding the banking sector's stress and its impact on rate hikes. Powell's remarks during the Thomas Laubach Research Conference suggested that credit stress could potentially limit the need for interest rates to rise as previously anticipated.
Powell acknowledged that financial stability tools had calmed conditions in the banking sector but highlighted that tighter credit conditions may impede economic growth, hiring, and inflation. As a result, the policy rate might not require as much upward adjustment to achieve its goals. Traders' expectations, reflected in the CME FedWatch tool, indicated a high probability of the central bank pausing rate hikes in the next policy meeting, with potential rate cuts anticipated later this year.
The market response was mixed, with Bitcoin holding its gains while other top assets in the crypto market turned green. Ether (ETH), the second-largest cryptocurrency, hovered around $1,809 with a 0.8% increase, while Injective Protocol's INJ surged by 10% to $7.07. On the other hand, Layer 2 Blockchain Optimism's OP experienced a 3% drop to $1.66.