Crypto on Edge: Bitcoin on Standby for Moves from the Fed and Trump’s Trade Policies.
The blockchain industry is once again at the peak of speculation, with the most conservative estimation of Bitcoin (BTC) by some claiming to be boosted by the Federal Reserve’s move. On the other side, Trump’s potential tariffs are doing nothing but casting a looming dark shadow. In this write-up, we look at the dividing forces of trade and monetary policy on Bitcoin price movements.
Fluctuations in Bitcoin’s Price: Never-Ending Exciting Journey
The pace at which Bitcoin is gaining popularity has led to it being subjected to a lot of scrutiny—it was passing around a value of 90,000 dollars, which it is currently pulling back from. Fluctuations in the price make Bitcoin susceptible, just like most cryptocurrencies, to changing reviews from crypto exchange platforms. Heightened confusion this time around can be seen due to the conflicting assumptions shaped off by the Fed, the White House, and other global relations, which are some of the key factors leading up to it.
Trump’s Predictions: The With Almost All Other Cryptocurrencies Seeing a Boom
Increased chatter paired with pressure from traders and concern for traders estimating where the mark hits the cream for competition sets eyes on Hayes, who felt confident guaranteeing a rush of demand for mid-April. Alongside crypto lord, every suspicion each accompanies, and with his strong mounting ambitions, only moves on to create his shadows.
The Balancing Act of the Fed: Inflation and Economic Growth
As I have highlighted before, a few weeks ago, the Federal Reserve’s Federal Open Market Committee (a mouthful, I know) decided to keep the interest rates steady after starting a rate cut cycle in September. Additionally, the FOMC lowered its expectation for economic growth but, at the same time, raised its inflation predictions. This balancing act, alongside the tapered pace of “quantitative tightening,” or bondholding reduction, has led Hayes to conclude the Fed is hinting towards a return to ‘stealth’ money printing through quantitative easing.
$36 Trillion Debt: Examining a Crisis?
Hayes argues these moves have been made in response to the explosive and untamed national debt the U.S. has been facing, reaching a staggering $36 trillion dollars after 2020. He speculates the Fed will need to shift to looser monetary policies to better control the ballooning debt, but at the cost of accepting higher inflation.
Tariffs: Temporary or Long-Term Risks?
The core underpinning of Hayes’ argument lies in the fact that he overlooks the inflationary negative consequences of the tariffs. Just like other economists, he highlights Powell’s remarks in one of the Fed’s press conferences. During the meeting, Powell mentioned that the “inflationary features of the tariffs are temporary.” For Hayes, this indicates the Fed remains less focused on the longer-term inflationary consequences of tariffs, thus increasing the likelihood of pursuing policies that are more favorable for asset prices, like Bitcoin.
Trump’s Tariff Threat: A Disruption to Market Equilibrium
The tariff policies that President Trump plans to implement on April 2nd for Canada, Mexico, and China are a worrying factor in their own right. These proposed tariffs are a cause for much uncertainty in the market. Their very existence can alter global trade as we know it, negatively impacting investor sentiment and market risk. This can lead to decreased asset value, including Bitcoin.
Can We Expect An Increase Soon?
Markus Thielen, head of 10x Research, predicted a surge in Bitcoin prices, estimating it could reach $90,000. This came even with the looming threat of tariff increases. According to Thielen, it is due to the perceived lack of clarity surrounding the proposed tariffs from Trump, combined with the Fed retaining their “slightly dovish” stance, suggesting they would pursue policies aimed at bolstering stimulus in the economy.
Powell’s “Fed Put”: A Market Safety Net?
Thielen makes the case for Powell’s statement, suggesting the “put” is firmly placed within the “Fed’s put.” “Fed put” is a market phrase describing the Fed’s inclination to step in and address the economic situation by supporting the asset price during a downturn. He claims that this “Fed put” effectively acts as a safety net supporting the recovery of stock prices and, subsequently, Bitcoin.
Monetary Policy and Trade Policy for Fighting for Battle
The cryptocurrency market resides at the crossroads of two devastating forces—the possibility of the Fed easing its monetary policy and the destructive force of Trump’s trade policies. In the short term, the balance between the two forces will dictate the herding behavior of Bitcoin’s price along with the crypto market.
Handling the Volatility
The uncertainty for traders and investors within the cryptocurrency marketplace has grown tremendously due to mixed signals from various news outlets. The Federal Reserve may seem like they are leaning towards an easier monetary policy approach, which is favorable for Bitcoin, but the ever-looming possibility of Trump’s tariffs brings about uncertainty. It is this conflict that will resolve Bitcoin’s decision of either maintaining its recovery momentum and reaching new highs or falling into the forces of a possible trade war. The next coming weeks will be pivotal for Bitcoin’s market trend decision.
