Powell's speech on the January rate decision: Impact on the markets

Powell’s comments during the late January rate decision represent a critical moment for the markets. The Powell speech that many analysts expected has arrived in a context of unprecedented political tensions. The Fed’s independence is under scrutiny, with pressures from both the Department of Justice and the influence of the White House, at a time when the fight for the next leader of the institution is intensifying.

Powell Under Pressure: An Exceptional Context

Powell’s speech is not an ordinary event. For the first time in years, the Fed chair faces challenges to his institutional authority that go beyond conventional political decisions. The independence of the Fed, a cornerstone of the U.S. financial system, is being questioned from multiple directions. This adds a political component to what should be a purely economic decision.

Expectations on Interest Rates: Very Low Probability of Changes

The likelihood of a rate cut is minimal, estimated at just 5%. Inflation remains a significant obstacle, while the economy maintains strength that discourages downward adjustments. Analysts expect interest rates to stay at their current levels, with little room for easing.

This scenario reflects Powell’s complicated position: he must maintain a policy stance that favors stability but faces political pressures seeking changes in the Fed’s leadership.

Impact on Cryptocurrencies and Expected Volatility

Uncertainty generated by Powell’s speech and rate decisions tends to translate into volatility in the cryptocurrency markets. Coins like MANTA, ZEN, and LTC have shown particular sensitivity to Fed announcements in recent periods.

The expected volatility creates conditions where momentum trading and breakout movements can be significant. BTC, ETH, and BNB, as the sector’s main assets, will likely also see movements correlated with traditional market reactions.

Dynamic Between Professional and Retail Traders

The history of these events often repeats itself with predictable patterns. Experienced traders position themselves early, anticipating movements based on data and history. Retail participants, on the other hand, tend to react after the main movements have already occurred.

This asymmetry of information and timing creates opportunities for those who understand the macroeconomic dynamics behind Powell’s speech. The key is to recognize that the most significant movements occur in the first hours after the announcements, before the average retail reaction materializes on the charts.