Bitcoin’s price volatility returned today as the asset had climbed beyond $85,500 but fell sharply after Jerome Powell, the Chairman of the US Federal Reserve, addressed the potential impact of the tariffs against China and other nations.
As reported by CNBC, Powell said a potential rush of imported goods to avoid increasing tariffs could weigh on estimates of gross domestic product.
The US central bank might find itself in a difficult position, having to choose between controlling inflation and supporting economic growth, he added.
“If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close,” Powell noted.
Answering a question after his remarks, the Fed Chair said it is likely the tariffs, which could rise to 245% for China, will move the central bank away from its goals of balancing inflation and ensuring full employment.
Powell also addressed the country’s interest rates, but he gave no clear indication of what the Fed’s next move would be. So far, the central bank has left them unchanged for two consecutive meetings this year, and Powell’s words hinted at more similar developments.
“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”
Bitcoin’s price reacted with immediate volatility to his comments. After dropping to $83,000 earlier today, the asset recovered a lot of ground and stood above $85,500.
However, it tumbled suddenly after his comments made the news, perhaps due to the uncertainty not only around the tariff impact but also around interest rates.
The liquidations are also on the rise, with almost $300 million being wiped out on a daily scale. The total number of wrecked traders stands above 140,000.