August 26 is the long-awaited day for a critical change in cryptocurrency price movements. At the end of today, the market will be taken over by bears or bulls, although everyone is hoping for a reversal of the bearish trend.
As a reminder, the latest inflation data release did not push the market down. Instead, investors saw prices rise. But this week’s price action shows that the recovery has waned.
But another move could come after the Federal Reserve’s annual meeting.
Annual meeting of the Federal Reserve
Every year the Federal Reserve convenes a meeting with many economists. This meeting is usually hosted in Jackson Hole, where the central bank sets its annual economic agenda.
Data on monthly US personal spending will be released during today’s meeting. This information is another critical piece of inflation data that will reveal the nature of the crisis. In addition, this data will show whether people are spending more or less now, indicating a healthy or unhealthy economy.
In addition to the release of the monthly cost of personal consumption, the crypto market is also worried about the Federal Reserve’s plan to curb inflation. Interested investors can watch Jerome Powell’s speech at Kansas City Federal YouTube channel.
Why should crypto investors be worried?
Recall that Neel Kashkari, CEO and President of the Minneapolis Fed, made several comments the day before stating his expectations for a Volcker-style approach. According to history, Paul Volcker was the chairman of the Federal Reserve in 1927. During rampant inflation in the US, Volcker created two brief but major recessions to forcefully stop spending and reduce inflation.
With such suggestions, Kashkari believes that the Federal Reserve should create a recession in order to stop inflation. Being one of the Fed officials, his statements worried many people in the crypto sector. This is because others, such as James Bullard, president of St. Louis, even earlier took the hardest position.
So, the scale could be tipped either way at today’s meeting. If current Federal Reserve Chairman Jerome Powell agrees with the others now, the crypto market will turn bearish. But if he decides to solve inflation peacefully, the crypto market will move bullish.
From the above expectations, it is evident that the Federal Reserve has the power to create a recession. Therefore, the outcome of the meeting now depends on how Jerome Powell decides to tackle inflation, dovish or hawkish.
Featured image from Pexels, charts from TradingView.com