Bitcoin BTC/USD may have found a new friend in town, as Fed Chair Jerome Powell took a surprisingly open stance on crypto assets during his Wednesday press conference.
Powell indicated that banks can serve crypto customers as long as they understand and manage the risks, marking a notable shift from his previously anti-crypto approach.
“We’re not against innovation, and we certainly don’t want to take actions that would cause banks to terminate customers.”
Moreover, he praised Congress for its ongoing efforts to establish a clearer regulatory framework for cryptocurrencies, emphasizing that stronger oversight would be beneficial for the industry and financial stability.
The largest cryptocurrency rallied 3% for the session to over $104,000 levels, on track to snap four straight days of losses.
Stock Market Sentiment Remains Weak
Wall Street, however, remained underwater, weighed down by persistent concerns over the AI trade.
Shares of Nvidia Corp. NVDA dropped nearly 6%. The dip follows reports indicating that President Donald Trump is pushing for stricter restrictions on U.S. chip exports to China.
The S&P 500 index — tracked by the SPDR S&P 500 ETF Trust SPY — closed 0.45% down for the day, broadly unchanged from levels it had before the Fed meeting. The Nasdaq 100 — followed by the Invesco QQQ Trust QQQ — finished 0.2% lower. The Dow fell 0.3%.
The Fed Chair provided a more balanced stance on interest rates, signaling patience while keeping options open for future adjustments.
“We are not in a hurry to cut,” Powell said, while also softening his tone during the presser. He noted that policy remains “meaningfully restrictive” and that recent inflation data has shown “more positive progress.”
Powell perhaps recognized that hawkish remarks, like those championed in December, would have inflicted unnecessary damage on an already volatile market.
Sector-wise, there were few standout performers. The Communication Services Select Sector SPDR Fund XLC closed 0.4% higher, outperforming the others but remaining broadly flat following Powell’s remarks.
The Real Estate Select Sector SPDR Fund XLRE was the session laggard, down 1.2%.
In currency markets, the U.S. dollar index remained steady at 108 levels, marginally up by 0.1% for the day.
Powell’s remarks pushed Treasury prices lower, sending yields on the rate-sensitive 2-year note back to 4.21%, roughly where they stood before the Fed’s statement.
Expectations for a March rate cut dwindled. Fed futures are now pricing in an 18% chance, down from 30% before the meeting. However, for the full year, markets still see a nearly 90% probability that the Fed will cut rates twice.
Betting market odds, tracked by Kalshi, remained largely unchanged. The most likely scenario points to two rate cuts in 2025.
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