In his testimony to Congress, Powell pointed to "broad" global weakness that was clouding the US economic outlook amid uncertainty about the fallout from the Trump administration's trade conflict with China and other nations.
Although in the near-term it remains incredibly unclear as to where BTC and the aggregated crypto markets are heading next, the Fed Chairman's recent comments about it and its rapid ascent to mainstream discussion is certainly one bullish fundamental factor underlying it.
"Powell's testimony made sure that there is a rate cut on the cards this month". Kicking off in the House of Representatives in front of the House Financial Services Committee today, Fed Chair Powell laid the groundwork for a series of interest rate cuts over the coming months.
President Trump has repeatedly argued that the USA economy would be growing faster if the Fed lowered interest rates.
The Fed's skittish outlook for the economy - which meanwhile downplayed the risks of inflation despite a strong job market - sent stocks roaring as it strengthened the central bank's case to take action to prolong an 11-year expansion.
U.S. stock index futures gained early on Wednesday, turning positive after Powell's remarks were released, while the United States dollar fell against a basket of other currencies. The yield on the 10-year Treasury note fell slightly 2.046%, and the yield on the 2-year slipped to 2.205%. We can measure whether a rate cut is being priced-in by examining the difference in borrowing costs for commercial banks over a specific time horizon in the future.
The inflation data, however, had little bearing on a widely expected view of an interest rate decrease this month at the Fed's next monetary policy meeting, analysts said.
But Trump's statements spooked financial markets so decisively, and the threats to the global economy became so palpable, that a rate cut now appears nearly certain.
The Fed chair's cautious stance on the world's largest economy helped revive some bets on heftier easing at its next policy meeting on July 30-31 - chance of a 50 bps cut rose to 27.6% from 3.3% on Tuesday, according to CME Group's FedWatch tool.
After raising rates four times past year, the Fed has indicated in January that it would be "patient" with future hikes.
By contrast, the higher tariffs announced against China in early May, a fear that the world's two largest economies might not be able to make a deal, and the tariff threat against Mexico, all added to the growing feeling that protectionism and higher tariffs were here to stay - at significant cost to investment and growth.
Mr Powell, in written testimony ahead of his appearance at the House of Representatives Financial Services Committee, said he expected continued USA growth. It thus stands to reason that if a US-China trade deal materializes at any point in time, there will be a violent repricing of Fed rate cut odds. "The uncertainties around global growth and trade continue to weigh on the outlook".