Bitcoin spikes above $24K as Fed chair Powell talks of ‘disinflation’

The price of Bitcoin (BTC) broke through the $24,000 ceiling and the total crypto market cap jumped nearly 4% after United States Federal Reserve Chair Jerome Powell indicated that inflation had begun slowing down in the world’s largest economy.

“We can now say, I think for the first time, that the disinflationary process has started […] we see it really in goods prices,” said Powell during a Feb. 1 Federal Open Market Committee press briefing shortly after announcing an interest rate hike of 25 basis points.

The rate hike and Powell’s remarks appeared to have gone down well in the crypto markets, which had been trading sideways in the lead-up to the speech but saw market cap increase by over $40 billion in the hours after the announcement. 

Cryptocurrency market capitalization from Feb. 1 to Feb. 2. Source: CoinMarketCap

The global crypto market cap is now at $1.09 trillion, up 3.88% over the last day, according to the latest figures from Coinmarketcap.

Meanwhile, BTC tipped slightly over $24,000 for the first time in 2023, reaching $24,161.27 according to Coinmarketcap.

Related: Bitcoin bulls plan to flip $23K to support by aiming to win this week’s $1B options expiry

That being said, Powell said they still expect inflation to continue rising in the services sector for some time and to be prepared for “ongoing rate rises.”

“We see ourselves as having more persistent inflation in that [services] sector, which will take longer to get down, and we have to complete the job. That’s what we’re here for.”

Powell noted that “ongoing rate rises” would still be appropriate as the Federal Reserve attempts to bring inflation back to its 2% target level.

It should be noted that disinflation refers to a slowdown in the rate of increase of general price levels, as opposed to deflation, where the general price level of goods and services decreases.