The price of Bitcoin (BTC) fell sharply after an earlier rally on Wednesday, coinciding with a downturn in U.S. stocks during the mid-afternoon trading session. At the time of reporting, Bitcoin was valued at $54,800, marking a decline of nearly 4% over the past 24 hours and over 6% from its earlier peak of $57,600. Ethereum (ETH) experienced an even steeper drop, trading at $2,322, down 7.1% from the previous day, pushing its ratio against Bitcoin to the lowest level in over three years. The broader CoinDesk 20 Index also declined by 3%.

The day’s trading had started positively following remarks by Bank of Japan Deputy Governor Shinichi Uchida, who indicated that the central bank would not raise borrowing costs amid market instability. These dovish comments led to a depreciation of the yen and boosted both the Japanese stock market and U.S. index futures. As a result, the Nikkei closed up by 1.2%, and U.S. stocks initially rose by around 1.5%. However, this optimism waned as the day progressed. Approximately ninety minutes before the close of trading, the Nasdaq was down 0.8% and the S&P 500 had fallen by 0.6%.

In an interview with CNBC, JPMorgan CEO Jamie Dimon expressed skepticism about the U.S. Federal Reserve’s ability to bring inflation back to its 2% target. Dimon cited concerns such as deficit spending, the push for remilitarization, and the transition to a green economy. While he anticipates an imminent Fed rate cut, he doubts it will significantly impact inflation. Former Federal Bank of New York President Bill Dudley also weighed in, suggesting that the Fed needs to implement substantial rate cuts soon.

Dudley, writing for Bloomberg, highlighted the rapid accumulation of evidence pointing to a weakening labor market and moderating inflation, suggesting that the Fed is lagging. He pointed out the recent spike in the unemployment rate, which has surpassed the “Sahm rule” threshold—an indicator of rising unemployment and an impending U.S. recession. Dudley argued that to achieve a neutral federal funds rate, the Fed would need to cut rates by at least 150 basis points, and an additional 100 basis points if it needs to reach an accommodative range.

Dudley concluded by warning of increased volatility in stock and bond markets, attributing this to Fed Chair Jerome Powell’s cautious approach, which is likely to delay any rapid easing measures.

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