The Chairman of the Fed indicates the postponement of interest rate cuts. What does this mean for cryptocurrencies?

Federal Reserve Chairman Jerome Powell has indicated that interest rate cuts may be further along than expected. He cited recent inflation data that challenges previous expectations of a rapid decline. The move signals a potential shift in the Fed's approach. It will also likely reopen the debate over the effectiveness of Bitcoin as a hedge against inflation.

Is Bitcoin still a guarantee against inflation?

Powell acknowledged that despite initial progress, inflation rates have yet to show sustained improvement toward the Fed's 2% target.

And he said: "Clearly, the latest data has not given us more confidence...Given the strength of the labor market and the progress made on inflation to date, it is appropriate that we give more time to the restrictive policy and let the evolution of data and expectations guide us. We."

If inflation remains unchecked, Powell said the Fed is prepared to hold interest rates "as long as necessary."

His comments, made alongside Bank of Canada Governor Tiff Macklem, suggest the Fed sees no need to cut interest rates in the near future. This represents a departure from previous expectations and suggests that the reduction may not come until later, in 2024.

Read more: How to protect yourself from inflation with cryptocurrencies?Market opening from April 30 to May 1, 2024 More clarity.

The possibility of continued high interest rates raises concerns about economic growth. It also raises questions about the price trajectory of assets such as Bitcoin (BTC).

Bitcoin, often touted as a hedge against inflation, has come under scrutiny in light of comments from the Federal Reserve. Its recent volatility and sensitivity to global factors also complicate its position as a reliable shield against inflation.

Skybridge founder Anthony Scaramucci answered this question. He argues that Bitcoin's current volatility is predictable for an asset with relatively low global adoption.

And he declared Scaramucci saying: "The currency will be both a hedge against inflation and a store of value as it grows. However, it is volatile."

He emphasized that Bitcoin's performance should be seen in the context of its development journey rather than just current volatility.

Additionally, Yat Siu, founder of Animoca Brands, adds a new perspective. He envisions the future value of Bitcoin. It is based on its role as a status symbol in the digital economy rather than a simple store of value.

“Bitcoin could reach over a million dollars at some point... not because it is a store of value, but because it will become one of the most important status symbols in the world. digital economy in the future." As he pointed out Seo during a roundtable at Web Summit Rio.

Institutional interest is growing… but will Hong Kong ETFs boost Bitcoin?

The growing institutional appeal of Bitcoin is undeniable. The approval of Bitcoin spot exchange-traded funds (ETFs) in the United States has led to a recent price surge. Additionally, the recent addition of Hong Kong's Bitcoin and Ethereum spot ETFs has sparked discussions about their potential impact on the market.

However, opinions are divided on the immediate impact of ETFs in Hong Kong.

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, also expresses a moderate outlook for Hong Kong ETFs. He points to factors such as the small size of Hong Kong's market, lack of participation from mainland China and less efficient trade infrastructure as potential limiting factors.

And he said: “The underlying ecosystem is less liquid and less efficient, which can have an impact on the performance of these ETFs.”

However, Balchunas acknowledged that “the addition of other countries to Bitcoin ETFs is undoubtedly a plus for Bitcoin in the long term.”

Markus Thelen, founder of 10X Research, adds that cultural preferences for direct investment in the region may limit the impact of Hong Kong ETFs compared to US funds.

“ETFs generally have limited success in Asia as investors prefer direct, concentrated bets. However, because these ETFs represent a single asset, their adoption will likely be more favorable. »

Despite mixed expectations around Bitcoin ETFs in Hong Kong, many analysts view the approval of these funds as a positive development. Especially, being seen Anthony Pompliano said this regulatory move is a potential signal that China may be softening its stance on Bitcoin. This opens avenues for its adoption among a large part of its population.

At the time of writing, Bitcoin is trading at $64,000. Stable after recovering from the recent decline caused by geopolitical tensions between Israel and Iran.

The Fed's policy shift and debate over Bitcoin's abilities to hedge inflation will continue to be major factors impacting the cryptocurrency market in the months to come.