Bitcoin has surged back to the $98,000 mark for the first time in nearly three months after the U.S. Federal Reserve confirmed it would leave interest rates unchanged for now.
The Fed’s decision, announced on May 7, comes amid increasing political tension, particularly from former President Donald Trump, who recently criticized Fed Chair Jerome Powell for being slow to act on rate cuts — even suggesting he might remove Powell from his role.
Fed Holds Firm Amid Inflation and Job Market Concerns
Explaining the move, Powell said the central bank’s rate-setting committee opted to keep interest rates within the 4.25%–4.50% range, citing concerns over a possible rise in unemployment and persistent inflation. While inflation has eased compared to previous levels, Powell noted it’s still hovering above the Fed’s 2% target.
Surveys from households and businesses revealed declining confidence, which Powell attributed largely to apprehensions around Trump’s trade policies. Nevertheless, Powell emphasized that the broader U.S. economy remains resilient, stating, “Despite the uncertainty, economic fundamentals are solid.”
Market data ahead of the announcement, particularly from CME Group’s FedWatch Tool, had already shown that investors were not anticipating a rate cut. Powell added that employment levels remain strong, with the labor market close to its full potential. Analysts now project a potential rate drop to around 3.6% by late 2025.
Bitcoin Sees Quick Pullback, Then Rallies
Following Powell’s statement, Bitcoin briefly dipped to $95,866 but quickly rebounded, hitting $98,000 for the first time since February 21. The crypto market has been gaining momentum recently, with the Fear & Greed Index shifting back into “Greed” territory. Meanwhile, spot Bitcoin ETFs have seen inflows totaling approximately $4.41 billion since March 26.
Still, not everyone is optimistic. On March 9, economist Timothy Peterson warned that the Fed’s reluctance to cut rates this year could spark a broader downturn in financial markets — potentially dragging Bitcoin back to around $70,000. His warning followed Powell’s earlier remarks that the Fed is in no rush and will wait for clearer economic signals before making major moves.
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