Janet Yellen is referring to increasing the interest rates to stop the economy from overheating. This obviously sent the markets into a sell-off style from S&P 500, Dow, Nasdaq to Bitcoin Ether while the USD Index inches upward.
The cost of Bitcoin is on a slide, hitting $53,200 so far and dragging Ether down to $3,175 from its latest all-time high $3,535 on Coinbase.
This latest weakness in prices is in accord with the sell-off found in the standard markets. The S&P 500 also dropped only about 2 percent before seeing a slight increase, the same as Dow Jones Industrial Average, which dropped about 1.3 percent. Nasdaq, meanwhile, is based on a decrease since last Monday by over 4.5%.
The USD index, in turn, saw a little uptick and is currently about 91. 30. Trader Light noted,
“Something spooked equities. Will likely put pressure on crypto and torch the recent leverage build up. BTC was weak and is already buckling, ETH will probably wick down on liquidations shortly.”
What spooked the standard markets was Treasury Secretary Janet Yellen speaking about raising the interest rates. During an economic seminar directed by The Atlantic, Yellen said,
“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat.”
“Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates.”
If prices get increased, people are risk-averse and more interested in maintaining their money safe .
Ever since the Covid-19 pandemic broke out early last year, Congress has published trillions of dollars and injected them to the market, inflating the prices of the assets. This increase in money supply and virtually zero rates are the principal drivers of Bitcoin’s rampant rally from March 2020 low of $3,800 to some new all-time high of $65,000 previous month. )
The Biden administration is now pushing for another $4 trillion infrastructure plan, and Yellen needs higher taxes to pay for this, asserting that the US needs to include shortages over the long run although she said the government still has”a reasonable amount of fiscal space.”
President Joe Biden is”taking a very ambitious” and”active” strategy,”but we’ve gone for way too long on letting long-term problems fester in our economy,” she explained.
The Federal Reserve, which Yellen directed from 2014-18, was maintaining the short-term rates near zero for over a year and time and Chair Jerome Powell guaranteed the marketplace it could be kept that way until the 2% inflation and full employment is achieved.
While inflation concerns are climbing, Yellen is not mostly concerned about it becoming a problem, and if that occur; there are tools to address it, she’d said. Just over the weekend, Yellen had told NBC that,
“We’re in a good fiscal position. Interest rates are historically low. They’ve been that way for a long time, and it’s likely they’ll stay that way into the future. But we do need fiscal space to be able to address emergencies, like the one that we’ve been in with respect to the pandemic.”
AnTy was engaged in the crypto space full-time for more than two decades now. Before her blockchain starts, she worked together with the NGO, Doctor Without Borders as a fundraiser and since then researching, reading, and producing for different business segments.