By Frank Martin (MoneyAmped.com)
On Thursday morning, Bitcoin reclaimed $99,000, a level it last saw in late January. The milestone was achieved after the United States’ central bank (Federal Reserve) announced that interest rates would remain unchanged this month.
According to Jerome Powell, the Fed Chair, the decision to hold the rates steady was driven by the growing risks of high inflation and unemployment. He added that Donald Trump’s trade policies have caused uncertainty, hence the central bank’s hesitation to adjust the rates before further clarification.
Notably, Trump had threatened to remove Powell from office last month for delaying rate cuts despite inflation declining significantly. Responding to a journalist’s question during yesterday’s press conference, the Fed chair said the US President’s commentary would not influence the central bank’s decisions.
Investors Predict a Rate Cut in June
It is worth mentioning that crypto investors didn’t expect the central bank to cut rates this month, according to data on CME Group’s FedWatch Tool, which indicated that market participants were 91% certain that the rate would remain unchanged in May. However, they anticipate a rate cut in June if the unemployment rate declines. Furthermore, investors expect the Federal Reserve to reduce interest rates to 3.6% before the year ends.
What Happens to Crypto If the Fed Doesn’t Cut Rates in 2025?
If the rates remain the same this year, economist Timothy Peterson says cryptocurrencies could witness massive price drops, with Bitcoin potentially plummeting to $70,000. He adds that a rate cut could turn investor sentiment positive, resulting in a significant rally to $150,000.
Following Powell’s most-anticipated speech, Bitcoin plunged to $95,765 before surging to $99,697 as of this writing. The price action has led to an increase in demand based on the Crypto Fear & Greed Index, which is now in the ‘Greed’ Zone. Moreover, Bitcoin spot ETFs have seen 24-hour net inflows worth $286 million, according to Farside Investors’ data.
Trump to Announce a Trade Deal With the United Kingdom
It is worth mentioning that the Fed’s decision on interest rates isn’t the only factor behind Bitcoin’s latest rally. Trump’s post on Truth Social, hinting at a potential US-UK trade deal, has also pushed Bitcoin’s price higher. The American President said on Wednesday night that he will announce a trade deal with a ‘respectable country’ today, May 8th, 2025. This announcement is expected to reduce the tension caused by his tariffs and could be good news for Bitcoin and other digital assets.
