Digital assets are rebounding with the broader markets following a three-day sell-off in response to the U.S. Federal Reserve leaving interest rates unchanged following strong economic performance in the United States.
On Dec. 13, Jerome Powell, the chairman of the Federal Reserve, said that rates are “likely at or near” their peak. “Inflation keeps coming down, the labor market keeps coming into balance,” Powell said. “It’s so far so good.”
Documents released alongside the announcement indicated the majority of the central bank’s open market committee, which is tasked with setting interest rates, anticipates three rate reductions for 2024. In November, the labor market grew by 200,000 jobs and the annual inflation rate dropped from 3.2% to 3.1%, while GDP is on track to reach pre-pandemic projections.
Investors reacted bullishly, with the Dow Jones index rallying 500 points to new all-time highs above 37,000, while U.S. bonds, gold, and cryptocurrencies also posted gains.
However, Powell said it would be “premature” to presume the U.S. economy is entirely out of the woods just yet. “Inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain.” Powell continued. “The committee is proceeding carefully.”
Bitcoin (BTC) is up 3.5% in 24 hours in response to the news while Ethereum (ETH) gained 2.7%, according to CoinGecko. Cardano was today’s best-performing top 10 cryptocurrency with a 13.6% jump, followed by Avalanche with 5.8%.
CFTC chairman says digital assets are commodities
Crypto investors may also be celebrating fresh comments from Rostin Behnam, the chair of the Commodities Futures Trading Commission (CFTC), asserting that most digital tokens comprise commodities — contradicting the hawkish U.S. Securities and Exchange Commission (SEC).
“Under existing law, many of the tokens constitute commodities,” the CFTC head told CNBC Squawk Box on Dec. 12. Benham continued that lawmakers need to adopt a “new way of thinking about policy and legislating” when applying “decades-old law” to the evolving web3 phenomenon.
Benham noted the long-standing battle between the CFTC and the SEC for jurisdiction over digital assets, with the SEC aggressively seeking to regulate digital assets as securities through enforcement actions. Benham urged Congress to “step in and overcome this feeling of not wanting to legitimize the technology.”
“[Crypto is] here, it hasn’t gone away, and we’re seeing it with the price of some of the bigger coins,” Benham added. “There is a gap in regulation and I need Congress to step in… we’ve literally been talking about this for years and we still don’t have a regulated environment.”
Source : DeFi News / Dec 14, 2023