In a surprising return, Bitcoin has once again reached the $98,000 mark following the U.S Federal Reserve’s decision to keep interest rates unchanged for the next month. This is the first time in nearly three months Bitcoin has achieved this value.
The Fed’s decision comes amidst growing pressure from former U.S President Donald Trump, who recently threatened to dismiss Federal Reserve Chair Jerome Powell accusing him of being tardy in reducing rates.
On May 7, Powell highlighted that the rates in the 4.25% to 4.50% range were held due to potential risks of increased unemployment and inflation. He noted that inflation has decreased significantly, though it’s still surpassing their 2% long-term goal.
The Fed chair pointed out that surveys from households and businesses showed a significant drop in sentiment, primarily due to concerns over Trump’s trade policies. Despite these uncertainties, Powell maintains that the economy continues to be in a strong position.
According to data from CME Group’s FedWatch Tool, the futures market expected very little chance of a rate cut prior to the announcement. Powell further noted that the unemployment rate is low, and the labor market is operating at or close to maximum employment. The market anticipates the Fed to lower the Fed funds rate to 3.6% by 2025’s end.
Bitcoin’s value briefly fell to $95,866 from below $97,000 after Powell’s speech, but it quickly rebounded, hitting $98,000 for the first time since February 21. Bitcoin’s momentum is on the rise, with the Crypto Fear & Greed Index returning to “Greed” territory. Spot Bitcoin exchange-traded funds (ETFs) have seen inflows of nearly $4.41 billion since March 26.
Network economist Timothy Peterson warned on March 9 that if the Fed refrains from rate cuts in 2025, it could trigger a wider market crash, possibly pushing Bitcoin down to $70,000. Peterson issued this forecast after Powell’s declaration in March that there’s no rush and they’re well-prepared to wait for more clarity.
This article does not provide investment advice or recommendations. Every investment and trading move comes with risks, and readers should conduct their own research before making any decisions.
