As Federal Reserve Chairman Jerome Powell cautioned last month, interest rates must remain elevated to ensure inflation does not reemerge. How this decision will affect the prices of bitcoin, and the overall stock market remains to be seen. Powell's stance comes as former President Donald Trump's trade tariffs take effect, driving the gold price higher and causing the bitcoin price to mirror stock market declines.
Tariffs were a specific pride Powell has said weren’t a catalyst for the need for a rate cut. David Morrison, senior market analyst at Trade Nation, conveyed in emailed comments that Powell's statement underscores the central bank's focus on controlling inflation, irrespective of external trade pressures.
The possible return of inflation would be a two-pronged death knell to the bitcoin price as well as the stock market. Since Trump’s inauguration bitcoin’s price has cratered. Yet, it’s still more than $1.60 above where it was at this time last year.
Further clouding the outlook, the prospect of another Trump firing has been raised by none other than Senator Elizabeth Warren, who warned that “nobody is safe.” Trump himself has expressed his impatience with Powell, stating on his Truth Social account that "Powell’s termination cannot come fast enough."
Powell has been clear on the Fed’s patient approach, with an eye toward more information before moving to change policy. Among other things, he predicted at the time that Trump’s tariffs would inflate inflationary pressures.
Alex Krüger, trader and economist, has been issuing warnings of coming “black swan” events. His recommendation — act fast to short the market if any of these things come to pass. Krüger predicted that if Trump were to fire Powell, stock markets would "implode," with the bitcoin price initially falling sharply before rising as it transitions "from a pure risk asset to a risk-safe haven hybrid."
