Bitcoin is nearing the $100,000 mark, recovering from an earlier dip due to economic uncertainty and U.S. dollar fears. Analysts warn about stagflation, which the Federal Reserve is grappling with as it prepares for a meeting next week. Speculation is growing that interest rate cuts could boost Bitcoin and other risk assets. Industry experts note Bitcoin’s remarkable performance amid traditional market challenges.
Bitcoin has recently skyrocketed toward the $100,000 mark, with prices not seen since before the tumultuous tariff-related market drop. A predicted tsunami of liquidity—potentially $10 trillion from Wall Street—is adding to the frenzy. This uptick follows a steep decline earlier in the year, with Bitcoin prices tumbling in April amidst rising fears surrounding the U.S. dollar’s future.
Concerns from U.S. President Donald Trump regarding Bitcoin and cryptocurrency, coupled with leaked reports of rising “panic” among establishment figures, have sparked alarm. Analysts are now warning about a looming “nightmare” for the Federal Reserve as the U.S. experiences its worst quarterly economic performance in three years. This data has intensified worries about stagflation hitting the economy, as highlighted by economists.
On social media platform X, analysts from The Kobeissi Letter remarked, “The Fed’s worst nightmare just got worse. The market is waking up to the reality of stagflation. It’s the lose-lose scenario they never wanted to face.” They pointed out that the Fed’s preferred Personal Consumption Expenditures (PCE) price index remained flat in March, following a 0.4% rise in February. The most recent figures reveal PCE inflation has climbed to its highest levels since July 2024, just before the Fed’s policy pivot.
In a surprising move last September, Federal Reserve Chair Jerome Powell cut interest rates, initiating a cycle of monetary easing that has stalled since then. Analysts at Kobeissi warn about the ongoing threat of stagflation—a troubling mix of rising inflation coupled with a stagnant economy.
The Fed is set to convene next week to consider altering interest rates, with forecasts suggesting no changes will occur. Traders, however, appear increasingly convinced that rate cuts could come as soon as June, which could fuel Bitcoin and other risk assets. Tracy Jin, from crypto exchange MEXC, explained that loosening monetary policy typically leads to a surge of liquidity into higher-risk investments like Bitcoin.
Earlier in the year, many traders faced disappointment as Bitcoin initially fell alongside stock values amid Trump’s intensifying trade war. However, in recent weeks, Bitcoin has not only recovered but surged past the $90,000 threshold in April, making it one of the year’s stronger investments.
David Hernandez, a crypto investment expert at 21Shares, commented via email on Bitcoin’s unique performance, observing, “Since President Trump’s ‘Liberation Day’ announcement, Bitcoin has taken on a life of its own, showing incredible strength against traditional market pressures. As the effects of Trump’s tariff policies become more apparent, we anticipate Bitcoin could continue to diverge from equities, proving a solid hedge against the volatility driven by policy changes.”
