Powell's speech shapes market sentiment: Bitcoin accelerates as the Fed cuts interest rates by 25 basis points

In recent weeks, every move by the U.S. Federal Reserve has been closely scrutinized by market participants. On November 8th, Powell’s speech during the Federal Reserve press conference marked a pivotal moment, triggering immediate and significant reactions in global markets. During that event, the Fed chair not only confirmed a 25 basis point interest rate cut, bringing the range to 4.5%–4.75%, but also provided reassurance regarding the international political landscape.

Key Highlights from Powell’s Monetary Policy Speech

In his speech, Powell directly addressed speculation about possible external influences on Fed policy. “Election results have no short-term effect on Fed policy,” Powell stated, dispelling fears of a radical change in monetary strategy. This statement was particularly important given the geopolitical context at the time.

The Federal Reserve also emphasized that “the labor market has generally loosened, the unemployment rate has increased but remains low,” and that “inflation has made progress toward the 2% target but remains quite high.” Powell clarified that monetary policy remains restrictive even after today’s cut, highlighting a cautious and gradual approach.

Global Reactions: When Central Banks Move in Sync

It wasn’t just the Federal Reserve cutting rates. Simultaneously, the Bank of England reduced its rates by 25 basis points, while the Swedish Riksbank eased interest rates by half a percentage point. This coordination among major central banks signals a shared view on the need to support global economic growth.

Bitcoin and Markets React to Powell’s Speech: New All-Time High

Immediately after Powell’s speech, Bitcoin’s price reacted dramatically. The cryptocurrency surged to $76,951, setting a new all-time high before pulling back slightly. At the time of writing, Bitcoin is trading at $68.17K, up 5.06% in the last 24 hours, reflecting a generally positive investor sentiment.

The CoinDesk 20 index, which tracks leading cryptocurrencies, outperformed Bitcoin, gaining 4.5% in the same period. Traditional stock markets also responded positively: the S&P 500 and Nasdaq closed up 0.8% and 1.5%, respectively.

What Does Powell’s Speech Mean for Future Rate Expectations?

Powell’s comments significantly altered market expectations regarding Fed actions. The probability of a further rate cut in December dropped from 33% to 28%, according to CME FedWatch, compared to pre-meeting estimates. This suggests the market anticipates a more cautious pace of rate reductions in the coming months.

Technical Analysis: Sustained Move or Opportunistic Bounce?

The rally following Powell’s speech has interesting technical characteristics. Bitcoin experienced a significant short squeeze, pushing altcoins like Ethereum (ETH), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA), as well as sector stocks like Circle and Coinbase, higher.

However, analysts advise caution. Joel Kruger of LMAX Group noted that the rebound was mainly driven by short covering and limited market liquidity, rather than clear fundamental catalysts. Joshua Lim of FalconX added that some funds are chasing the rally, rotating into more volatile altcoins and derivatives.

Key technical resistance levels remain at $72,000 and $78,000. A sustained break above these levels will be necessary to confirm a more robust bullish trend rather than just a technical bounce.

Conclusion: Powell’s Speech as a Market Catalyst

Powell’s November 8th speech once again demonstrated the power of central bank communications in guiding global market movements. While the 25 basis point rate cuts were widely expected, the reassurance about monetary policy stability provided during the speech fostered enough confidence to sustain a significant rally in Bitcoin and related cryptocurrencies. Investors will continue to closely monitor upcoming developments and future Powell statements to inform their investment strategies.