Bitcoin experiences fluctuations around $27,000 as Fed Chair Powell hints at a potential conclusion to interest rate increases.

Bitcoin (BTC) approached $27,000 following the Wall Street opening on May 19, coinciding with remarks from the chair of the United States Federal Reserve regarding policy.

BTC/USD 1-hour candle chart on Bitstamp. Source: TradingView

BTC price volatility resurfaces as Powell addresses the audience

Data from Cointelegraph Markets Pro and TradingView tracked BTC/USD as it sought to regain the key level within its short-term trading range.

Attention was focused on Fed Chair Jerome Powell that day, who was presenting at the Thomas Laubach Research Conference in Washington, D.C.

Market anxiety had resurfaced the previous day as other Fed officials, along with unemployment data, raised expectations for ongoing interest rate increases.

“While the financial stability measures have helped to ease conditions in the banking sector, developments there are contributing to tighter credit conditions and are likely to impact economic growth, employment, and inflation,” he stated.

“Consequently, our policy rate may not need to increase as much as it otherwise would to meet our objectives. Naturally, the degree of that is highly uncertain.”

Powell further noted that the divergence between market expectations and the Fed regarding rate hikes “seems to indicate a different outlook, one in which inflation decreases much more rapidly” than officials anticipate.

Bitcoin thus seemed particularly responsive to indications that rate hikes might conclude sooner rather than later, with the conference still in progress at the time of this writing.

Just prior, a snapshot of liquidity on the Binance BTC/USD order book shared on Twitter by monitoring resource Material Indicators revealed a lack of substantial support above $26,000.

Conversely, ask liquidity was gradually accumulating closer to the spot price at around $27,300.

Here's an intraday look at the #Bitcoin order book on @binance just before #FED Chair #JPow speaks.
His remarks will influence #TradFi and #Crypto markets. pic.twitter.com/ezyQMyE1bm

— Material Indicators (@MI_Algos) May 19, 2023

“This year is pivotal for how the next few will unfold in the economy,” noted popular trader Crypto Tony, referring to Powell’s comments on Fed policy.

Markets heighten bets on rate freeze

As Bitcoin exhibited signs of volatility, the strength of the U.S. dollar, which is typically inversely correlated, showed some pressure.

Related: Bitcoin price risk? US debt deal to trigger $1T liquidity crunch, analyst warns

The U.S. Dollar Index (DXY) decreased by 0.4% on the day, briefly falling to 103, negating the day’s earlier gains.

U.S. Dollar Index (DXY) 1-hour candle chart. Source: TradingView

The latest information from CME Group’s FedWatch Tool, meanwhile, indicated a rapid shift in market sentiment towards a pause in rate hikes for June.

Starting the day with approximately 62% odds of a pause, that figure rose to 80% within the first half hour of Powell’s address.

Fed target rate probabilities chart. Source: CME Group

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This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making any choices.