itcoin drops 4% as Fed Chairman Powell expresses concern about rising bond yield

[Cordillerabit]

Bitcoin's price dropped the most in a week after Federal Reserve Chair Jerome Powell said he'd be "concerned" if financial conditions tightened, citing rising US government bond yields as a source of upward pressure on borrowing costs.

The remarks could indicate a greater reluctance to provide new monetary stimulus. Bitcoin prices quadrupled last year and are up 66 percent this year on speculation that the cryptocurrency could act as an inflation hedge in the face of central banks printing trillions of dollars.

Bitcoin (BTC, -6.79%) was changing hands around $48,336, down about 4% on the day as of press time.

Powell told the Wall Street Journal in a question-and-answer session that he doesn't expect higher inflation to last and that the Fed is still "a long way from our goals" of an economic recovery and lower unemployment.

According to Bloomberg News, the yield on a 10-year US Treasury note climbed above 1.5 percent on Thursday, as disappointment spread among some traditional market traders who had hoped the Fed would provide specifics on how to lower long-term interest rates.

For bitcoin traders who believe the cryptocurrency's price is a good hedge against currency depreciation, Powell's remarks provided few indications that the Fed will take new dovish steps. Such actions could include the expansion of the Federal Reserve's $120 billion-per-month bond-purchasing program.

Alex Kruger, a cryptocurrency trader, tweeted, "Powell did not deliver." “Basically, he said the same dovish things he always said.”

Stocks fell on Thursday, possibly reflecting dwindling expectations for additional stimulus to boost the stock market.

Source: Bityard