Bitcoin hits $24,000 – Fed chairman doesn’t believe U.S. economy is in recession, though it technically meets the definition

Bitcoin’s recent steady rise near $24,000 was driven by predictions that the U.S. Federal Reserve (Fed) will not raise interest rates sharply after the U.S. economy reportedly contracted.

  • Bitcoin prices rose 4% to $23,809.97.

However, bitcoin remained well below $69,000, the record high reached in November 2021.

Previously, investors had feared that the Federal Reserve’s numerous interest rate hikes and balance sheet reductions would strain liquidity in the markets and plunge the U.S. economy into recession.

This week, the Fed decided to raise interest rates again by 0.75%. However, it signaled that in the coming meetings the interest rates will not be raised so much after the U.S. economy has shrunk two quarters in a row.

The US Department of Commerce published its first estimate for the gross domestic product (GDP) in the second quarter. According to this estimate, the US economy contracted by 0.9% in the second quarter, after a decline of 1.6% in the first quarter had been reported.

The economy contracted for 2 consecutive quarters. This put the U.S. in a “technical” recession, which meets the definition of a recession.

At a press conference following the Federal Reserve’s monetary policy meeting, Fed Chairman Jerome Powell said he does not believe the U.S. economy is in recession. This is because many sectors of the economy remain strong, including the labor market.

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Friday, July 29, 2022

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