Crypto Markets Await Powell's Testimony for Rate Cut Hints

Federal Reserve Chair Jerome Powell is scheduled to deliver his semiannual testimony to Congress on June 25–26, an event that has captured the attention of the crypto market. This testimony is particularly significant given the rising global risks and inflation concerns, making Powell's views on potential rate cuts a focal point.

Powell's testimony follows recent remarks from Fed Governor Christopher Waller, who indicated that a July rate cut could be on the table if inflation continues to decrease. Traders are now looking to Powell's testimony for further insights into the likelihood of such a move. The Federal Reserve has kept its benchmark rate at 5.25%–5.50% since July 2023, with officials anticipating only one rate cut for 2024. However, recent geopolitical tensions and new U.S. tariffs have sparked concerns that a prolonged tight policy could weaken the economy.

Crypto markets, which are highly responsive to monetary policy changes, have experienced a recent pullback. Bitcoin, for example, has fallen below $99,000 from over $108,000 earlier this month. Market participants view lower interest rates as a potential catalyst for renewed demand in digital assets. Powell's testimony will be closely examined for any indications of a shift in the central bank's stance, especially in light of the new risks posed by geopolitical tensions and U.S. tariff policies.

The upcoming testimony is expected to address various topics, including inflation, labor trends, and global risk factors. Powell will likely be questioned on whether the central bank's current stance is appropriate given the current economic conditions. Lawmakers may also seek clarity on how global instability could influence future Fed decisions. Data to be released later this week, including jobless claims and the May personal consumption expenditures (PCE) index, will provide additional context for the market's assessment of the Fed's next steps.

If Powell indicates a willingness to consider rate cuts in the coming months, risk assets, including cryptocurrencies, could see a positive reaction. Conversely, a firm stance on maintaining high rates may keep crypto prices under pressure. The hearings will commence on Tuesday at 10 a.m. before the Senate Banking Committee and continue on Wednesday before the House Financial Services Committee.