Bitcoin (BTC-USD) saw a slight uptick in early trading on Thursday, inching closer to the $85,000 (£64,192) threshold after a volatile 24 hours. This modest recovery follows a significant sell-off triggered by Federal Reserve chair Jerome Powell’s warning on Wednesday regarding US president Donald Trump’s tariff increases, which could fuel inflation and pressure economic growth.
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Powell’s statements led to a rapid downturn in the cryptocurrency markets, with major altcoins experiencing substantial losses. Bitcoin, which had nearly reached $86,000, fell to around $83,700 before rebounding to approximately $84,800 early Thursday.
In the meantime, US Treasury yields dipped following Powell’s comments but showed modest gains by Thursday morning. Gold also surged to a new record high exceeding $3,322, solidifying its position as the favored safe-haven asset in the market.
During his speech at the Economic Club of Chicago, Powell cautioned that inflationary pressures were intensifying while growth forecasts were softening, potentially paving the way for stagflation — a scenario characterized by stagnant economic growth combined with rising prices.
Solana (SOL-USD) was the standout performer among major altcoins on Thursday, rising by 8%.
As of 10:13:00 UTC. Market open.
Despite some investors expressing concern over Treasury yields, Powell’s comments helped alleviate immediate market pressure. The yield on the 10-year US Treasury note fell nearly five basis points to 4.279% on Wednesday, closing at 4.29%.
By Thursday morning, however, it had bounced back up to 4.33%. Similarly, the yield on the 30-year note decreased to 4.74% before recovering to 4.78%.
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These fluctuations indicate that while there remains a degree of caution, the fears of runaway inflation or a significant bond market sell-off have yet to fully materialize.
On the regulatory side, Powell emphasized the necessity for a comprehensive legal framework for stablecoins like USDC and USDT, noting renewed efforts in the US Congress to formulate legislation. He stated that such digital currencies could have widespread appeal if governed by regulations that ensure consumer protection and transparency.
He also proposed that some banking guidelines related to cryptocurrencies might be relaxed to foster responsible innovation, provided that the fundamental principles of financial stability are maintained.
QCP Capital analysts have noted that as US Treasuries and the dollar diminish in their traditional safe-haven roles, gold has emerged as the market’s preferred store of value. However, they raised questions about bitcoin’s long-touted status as “digital gold.”
