07/04 update below. This post was originally published on July 3

has suddenly fallen back to $60,000 per bitcoin after a billionaire who bought bitcoins revealed he had switched to bitcoin.

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Bitcoin prices have struggled over the past month, falling nearly 15% amid fears of a “real correction.”

Now, after one of the biggest bitcoin bulls said the cryptocurrency could eventually replace the US dollar, Federal Reserve Chairman Jerome Powell is warning of a “critical period” for the Fed, calling deficit levels “unsustainable.”

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“The level of debt we have is entirely sustainable, but the path we are on is unsustainable,” Powell said at the European Central Bank conference in Portugal, the report said. Financial TimesHe added that the Biden administration was taking excessive risks by “running a very large deficit at a time when we are at full employment” and said that “you cannot sustain these levels for long in good economic times.”

In May, Treasury Secretary Janet Yellen issued a stark warning about the growing US national debt of $34 trillion. Some believe that this debt could push the bitcoin price to $1 million in the next 18 months.

Bitcoin, crypto and stock market traders have been watching the Fed closely in recent months for signs that the bank will cut rates, with analysts having to scale back their expectations from around seven rate cuts in 2024 to just one or two.

“Finding the right balance in monetary policy during this critical period is really what I’m thinking about in the early hours of the morning,” Powell said in response to a question about his biggest concerns, the AP reported.

Update 07/04: Bitcoin price and the crypto market have crashed significantly over the past 24 hours. Bitcoin price has now fallen well below $60,000, wiping out $200 billion from the combined crypto market since July 1st. Ethereum and the rest of the mainstream market have fallen more than Bitcoin. Ethereum rival Solana, Telegram-linked toncoin, and meme-based dogecoin are all down nearly 10% since yesterday.

“Bitcoin breaks key technical and psychological levels at $60,000,” Markus Thielen, founder of 10x Research, wrote in emailed comments.

“This is a key level for bitcoin miners and bitcoin spot exchange-traded fund (ETF) buyers, and it also broadly marks the bottom (support) of the three-month trading range. Price declines could accelerate if support is broken and sellers rush to find liquidity. Only uninformed traders are willing to buy here. A break of this support could trigger a sharp drop to the low $50,000s.”

Last month, the Federal Reserve left interest rates unchanged and signaled it would make just one cut in 2024, with more to come in 2025. The Fed has been under pressure to cut rates after raising them at a record pace following massive Covid-era stimulus spending and money printing that sent inflation out of control.

“Powell said the U.S. was back on a ‘disinflationary path,’ but added that more data was needed before the Fed would consider cutting rates,” Russ Mould, investment director at AJ Bell, said in emailed comments. “The last sentence sounds a bit like a broken record as far as the market is concerned, so the key part of Powell’s speech was the reference to disinflation, as investors interpreted it as a stronger case for cutting rates soon.”

Attention now turns to the release of the minutes of the Fed’s June meeting on Wednesday and the jobs report on Friday. These reports could “confirm” expectations of a rate cut in September if employment is seen to be declining.

“If Friday’s jobs report were softer than expected, that would likely further strengthen the case for that cut. Markets are pricing the chance of a cut at about 70%, perhaps a bit short,” said Michael Brown, senior research strategist at Pepperstone. Market overview.

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The prolonged higher interest rates have prompted a warning from analysts at the world’s largest asset manager BlackRock, who said an “unprecedented” scenario is unfolding that could hit bitcoin prices and the crypto market.

“We see central banks being forced to keep interest rates higher than pre-pandemic levels to address ongoing inflationary pressures,” BlackRock analysts wrote in a report. BlackRock has helped fuel the bitcoin price explosion this year by revolutionizing the spot market for bitcoin exchange-traded funds (ETFs) on Wall Street.