Bitcoin price slides despite stock gains ahead of this week's Fed speech at Jackson Hole

Quick Take

  • The bitcoin price has ticked lower, despite equity market gains ahead of Fed Chair Jerome Powell’s speech at this week’s Jackson Hole symposium.
  • The event could offer clues as to the scale of a possible Fed rate cut in September and give indicators about the general health of the U.S. economy.

The bitcoin price ticked lower over the past 24 hours, despite U.S. equities trading largely in the green ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium later this week.

Over the past 24 hours, the bitcoin price trended down by almost 3%, to change hands for around $58,500 as of the time of writing. The move lower comes despite U.S. equity markets gaining after the opening bell on Monday. The Nasdaq Composite and the S&P 500 were up 0.13% and 0.18%, respectively, in early trading.

To highlight the contrasting performance between bitcoin and broader risk assets, QCP Capital pointed to the digital asset's futures funding rate, which has recently taken a negative turn. "In contrast to equities, crypto sentiment is strikingly bearish, with the bitcoin futures perpetual funding rates dropping to -13% over the weekend, the lowest since 2022," QCP Capital analysts said in a note on Monday.

The analysts noted options market indicators that showed investor caution ahead of this week's Jackson Hole symposium. "There are signs of nervousness as the options market is pricing in a 1% swing on the S&P 500 for Fed Chair Powell’s Jackson Hole speech this Friday," QCP Capital analysts added.

Bitcoin price volatility is expected to increase this week

The upcoming event in Jackson Hole could see increased price volatility for bitcoin, according to a different analyst. "As the market awaits further announcements from the Fed at the Jackson Hole Symposium, and the release of macroeconomic indicators, bitcoin volatility could rise over the coming days or week," BRN analyst Valentin Fournier told The Block.

Fournier cited an increase in bitcoin futures open interest ahead of the Jackson Hole event. "The increase in open interest could be linked to investors' anticipation of potential profits if the announcement is positive," he added.

Broader financial markets are cautiously awaiting Powell's speech on Friday at Jackson Hole, looking for clues about what the central bank might decide at its policy meeting next month, according to Fournier. "Powell's speech could see the Fed's announcement of its first rate cut, and we maintain our view of a rally pushing prices toward $65,000 and $67,000 before an eventual new dip," he added.

Interest rate traders are betting that September's Federal Open Market Committee (FOMC) meeting will deliver the first rate cut since March 2020. Powell's speech could be closely scrutinized for clues about the size of a possible rate cut. According to the CME FedWatch tool, there is currently a 71.5% probability of a 25 basis point cut and a 28.5% probability of a 50 basis point cut, at next month's meeting.

Risk assets, such as stocks and cryptocurrencies, tend to be sensitive to changes in interest rates because lower rates can make them more attractive by reducing borrowing costs and encouraging investment.


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© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].

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