Bitcoin Hits $98K as Fed Holds Rates
Bitcoin (BTC) reclaimed the $98,000 mark for the first time in nearly three months following the US Federal Reserve's announcement to maintain interest rates. This decision comes despite significant pressure from President Donald Trump, who recently threatened to dismiss Fed Chair Jerome Powell for his perceived slowness in lowering rates.
Fed's Justification for Holding Rates
On May 7, Chair Powell explained the Federal Reserve's rate-setting committee's decision to keep rates within the 4.25% to 4.50% range. He cited rising concerns about higher unemployment and inflation as the primary reasons. Powell noted that inflation, while having decreased significantly, has remained above the 2% target for an extended period. Furthermore, he mentioned a substantial decline in business and consumer sentiment, primarily attributed to anxieties surrounding Trump's trade policies. Despite this uncertainty, Powell emphasized that the economy remains strong.
Pre-announcement predictions from the CME Group's FedWatch Tool indicated minimal expectations for a rate cut. The market anticipates a reduction of the Fed funds rate to 3.6% by the end of 2025.
Following Powell's speech, Bitcoin briefly dipped to $95,866 before swiftly recovering to surpass $98,000, its highest point since February 21. This surge follows a period of increasing momentum, with the Crypto Fear & Greed Index entering "Greed" territory and spot Bitcoin ETFs experiencing inflows of nearly $4.41 billion since March 26.
Market Analysis and Predictions
Economist Timothy Peterson previously warned that a delay in Fed rate cuts could lead to a broader market downturn, potentially pushing Bitcoin back towards $70,000. This prediction followed Powell's March statement indicating a preference for waiting for clearer market signals before making rate adjustments.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investing in cryptocurrencies involves significant risk.
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