Fed Vice Chair Philip Jefferson's Comments on Rate Cuts and Crypto Implications

Fed's Cautious Stance on Rate Cuts

Fed Vice Chair Philip Jefferson recently emphasized the importance of caution when adjusting interest rates amid uncertain economic conditions. His remarks align with other Fed officials' sentiments, urging a careful approach while assessing evolving market dynamics. This comes after the Federal Open Market Committee (FOMC) decided to maintain the policy rate at 4.25%-4.5% earlier this month.

Inflation Trends and Policy Outlook

Over the past year, the Fed's preferred inflation gauge, the personal consumption expenditures (PCE) price index, has shown a decline. In December, the index rose 2.6% year-over-year, remaining above the Fed's 2% target. Jefferson suggested that inflation could continue to ease but expressed tempered expectations.

Crypto Market Reactions

The crypto market exhibited mixed price action following Jefferson's comments. Bitcoin, Ethereum, and other digital assets experienced volatility, with Bitcoin dropping to $91,178 before recovering to $99,600. Ethereum fell to $2,150 but rebounded to $2,763. Other cryptocurrencies like Cardano, Tron, and Avalanche saw gains ranging from 1.75% to 7%.

Key Levels to Watch

Bitcoin has reclaimed a critical demand zone between $96,475 and $99,360 as support. Analysts suggest that as long as this level holds, the outlook favors the bulls, particularly if the $102,350-$103,900 supply wall is broken.

The Fed's cautious approach and inflation trends continue to shape market expectations, with crypto assets remaining sensitive to macroeconomic developments.