The chairman of the Federal Reserve in the United States, Jerome Powell, expressed his rather pessimistic opinion about the rising inflation in the region. This statement took place on November 30, 2021, during a Senate Banking Committee hearing on Capitol Hill in Washington, DC. We talk about why inflation has lost its “temporary” status, as well as its impact on the crypto market, in today’s article.
Why do we no longer talk about inflation as “transitory”?
According to Jerome Powell, the current inflation in the United States (as well as, unfortunately, in Poland), will continue at least until mid-2022. This is the reason why the government should stop using the term “temporary”, which has so far been repeated by politicians like a mantra. How did Powell justify his opinion? It is best illustrated by his words to Senator Pat Toomey: “So I think the word transitional has different meanings to different people. For many, it conveys time, a sense of short-termism. We tend to use it to communicate that something is not going to leave a lasting mark in the form of higher inflation. I think it’s probably a good time to step back from using the word and try to explain more clearly what we mean.”
How has this situation affected Bitcoin (BTC) and could the consequences be severe?
It is impossible to single out a single factor that has a direct impact on “galloping” inflation. Certainly one possible factor is the new variant of the coronavirus, omicron, which Powell also referred to in his speech. But will his words, and the Senate Banking Committee meeting in general, have an impact on bitcoin (BTC)? And why are we even talking about BTC on the occasion of inflation?
The reason is simple – until now, Bitcoin has been considered one of the best assets that can protect an investor from inflation. Why? Because of the top-down controlled supply of this token. But surely, and in this case, is BTC the right choice? Not necessarily. After the Senate Banking Committee hearing, the price of BTC fell by almost $2,000. So, will BTC bounce back from the “hole” and get back on track? For now, this matter is not entirely clear. But you can be sure that we will keep an eye on it!