Today, U.S. Federal Reserve Chairman Jerome Powell will give a speech on the Fed’s monetary policy. Contrary to expectations, it may not have a major impact on the price of Bitcoin (BTC).

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The daily price chart of Bitcoin

The markets apparently expect the Fed to show significant changes in its policies. Some strategists said that the Fed could allow inflation to exceed 2% to compensate for the slowdown in the economy.

If that happens, in the medium and long term, it could be a catalyst for safe haven assets like gold and potentially Bitcoin, given their close correlation in recent months.

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Bitcoin vs. gold price

A historical discourse is approaching

However, Tom Graff, director of fixed income at Brown Advisory, hinted that the market might not show a significant reaction.

Investors are somewhat aware of what Powell is expected to say at the Jackson Hole conference. Many analysts anticipate that the Fed will keep interest rates low for the foreseeable future and possibly allow inflation to rise.

In theory, since inflation could damage the value of the US dollar, it would subsequently benefit gold and Bitcoin. However, both gold and Bitcoin have stagnated over the past week, while the U.S. stock market has recovered.

Graff believes that the Fed will have to demonstrate its willingness to undergo a major policy rethink through its actions. Until then, the strategist said the market would have a hard time believing the regulator.

He stressed that the Federal Reserve lacks credibility among investors, which could affect the market’s response to the speech. Graff explained:

„The credibility of the central bank is crucial. Currently, they have no credibility that they can or are willing to allow inflation to exceed 2%, and that is a problem. Actions will speak louder than words. The market will have to see that they do not raise interest rates even when unemployment drops long before they believe it.

The scepticism of the market towards Powell’s speech explains the continuous fall in the price of gold. Since reaching a new record of $2,075 on August 6, gold has fallen by about 6.5% to $1,940.

Winklevoss suggests that higher inflation is good for Bitcoin

In the long term, avid Bitcoin investors and industry executives expect low interest rates and higher inflation as a catalyst for Bitcoin’s price to rise.

Tyler Winklevoss says the U.S. Federal Reserve is the „biggest driver“ of Bitqt price
Tyler Winklevoss, a multi-million dollar investor in Bitcoin and co-founder of Gemini, said the Fed has been the biggest „driver“ of Bitcoin. He said:

„The FED, under the leadership of Jerome Powell, continues to be the biggest driver of Bitcoin. On Thursday, he will give a speech on how the Reserve will begin to target higher inflation.

Referring to the Jackson Hole symposium, Bill Barhydt, Abra’s CEO, said the Fed is feeding the sentiment around Bitcoin. He added:

„Bitcoin doesn’t need the Fed to succeed, but if they insist on throwing gasoline on the fire, so be it.