Shiba Inu (SHIB), Cardano (ADA), XRP as well as several other altcoins turned green during a speech by Federal Reserve Chair Jerome Powell before giving up some of their gains.
Powell dismissed market concerns about "stagflation," a scenario in which slow economic growth is coupled with high inflation. He said that he did not see "the stag or the flation."
Earlier, JPMorgan CEO Jamie Dimon amplified stagflation concerns, warning that the US economy might be heading back to the 1970s.
In response to Powell's speech, American businessman and investor Jeffrey Gundlach said that he expects only a single rate cut this year. He doesn't see a rate cut coming this June. The Fed chair himself has stated that it would be hard to predict how the rates are going to change, but he has predicted that the next policy move is unlikely to be a cut.
According to Powell, rate cuts could come sooner due to an unexpected weakening in the labor market. However, the decision will still hinge on the incoming inflation data. Powell has stressed that the Fed is now satisfied with inflation staying at 3%. The Fed's goal is to bring inflation back to 2% before it would be able to start cutting rates.
Interest rate futures are betting on a single rate cut in 2024. The first rate cut is expected to occur in September.
The cryptocurrency market has been hit hard by the Fed's U-turn, with Bitcoin logging its worst monthly candle since August 2023. The Fed was previously predicted to implement at least three rate cuts this year.