Bitcoin has surged to $98,000 for the first time since February 21, following the U.S. Federal Reserve’s decision to keep interest rates steady. The Fed opted to maintain rates in the 4.25% to 4.50% range, citing concerns over inflation and unemployment. The decision comes despite pressure from U.S. President Donald Trump, who previously criticized Fed Chair Jerome Powell for not cutting rates sooner.
Fed’s Stance on Inflation and Employment
Fed Chair Jerome Powell emphasized that while inflation has decreased significantly, it still remains above the Fed’s 2% target. “Despite heightened uncertainty, the economy is still in a solid position,” Powell said during a May 7 press conference. However, he noted a decline in economic sentiment, attributing it to Trump’s trade policies and economic uncertainty.
Powell also addressed labor market conditions, noting that the unemployment rate remains low and that the market is nearing maximum employment. According to the CME Group’s FedWatch Tool, the market expects the Fed to lower rates to 3.6% by the end of 2025, though Powell stated that the committee is “well-positioned to wait for greater clarity.”
Also Read: Bitcoin Price Analysis: Whales Accumulate as Retail Traders Exit
Bitcoin’s Reaction and Market Outlook
Bitcoin initially dropped to $95,866 after Powell’s remarks but rebounded to $98,000 within hours. The recovery aligns with increasing optimism in the crypto market, as the Crypto Fear & Greed Index shifted back to “Greed” territory. Additionally, Bitcoin exchange-traded funds (ETFs) have seen inflows of approximately $4.41 billion since March 26, signaling growing institutional interest.
However, network economist Timothy Peterson cautioned that if the Fed delays rate cuts in 2025, Bitcoin could potentially retrace to $70,000. “The market is still digesting the Fed’s position,” Peterson said, underscoring the importance of economic data in shaping Bitcoin’s trajectory.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
