Bitcoin's price declined by nearly 2% in the past 24 hours after US Federal Reserve Chair Jerome Powell said that inflation remained problematic.
In prepared comments before the US Senate Banking Committee on Tuesday, Powell explained that the Federal Reserve will likely need to raise its key interest rate higher than had been anticipated.
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The cause of the market route being Powell's prepared testimony to the US Senate banking committee, which stated: “As I mentioned, the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,”
He added, “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
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The Fed has raised its benchmark interest rate eight times over the past year, most recently a quarter percentage point increase early last month that took the overnight borrowing rate to a target range of 4.5% to 4.75%.
Higher interest rates encourage investors to save in fiat currency such as the dollar, and a retreat from high risk assets such as bitcoin.
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