The post Bitcoin at volatile crossroads before crucial Fed guidance expected later today appeared on BitcoinEthereumNews.com.

Bitcoin markets are bracing for potential turbulence as the Federal Open Market Committee prepares to conclude its May 6-7 meeting. While the federal funds rate is widely expected to remain unchanged at 4.33% (target 4.25%−4.50%), attention will turn to the tone and nuance of Chair Jerome Powell’s subsequent press conference at 2 P.M. EST, which may prove pivotal for risk assets, including Bitcoin. The backdrop is complex. The U.S. economy has contracted in the first quarter of 2025, marking a reversal from late 2024. Consumer spending has slowed considerably while inflation remains elevated, with the core PCE price index climbing to 3.5% annually. At the same time, recently enacted trade tariffs are poised to place upward pressure on prices while dampening growth prospects. Indicator Q4 2024 (Actual) Q1 2025 (Actual) Trend & Fed Implications Real GDP Growth (Annualized) 2.4% -0.3% Contraction signals economic weakening; it pressures the Fed towards a more accommodative stance. PCE Inflation (Annualized) 2.4% 3.6% Acceleration well above target; pressures Fed to maintain a restrictive stance. Core PCE Inflation (Annualized) 2.6% 3.5% Core inflation is also accelerating, reinforcing concerns about underlying price pressures. Unemployment Rate ~3.7−3.9% (est.) 4.2% Slight uptick but still relatively low; gives Fed some room but watching for deterioration. Consumer Spending Growth 4.0% 1.8% Sharp slowdown indicates weakening demand; a concern for future growth. This combination has raised the specter of stagflation, leaving the Fed in a precarious position with limited policy flexibility. Bitcoin’s role and impact in macroeconomics Bitcoin, which has become more closely tied to macroeconomic narratives amid surging institutional adoption through Exchange-Traded Funds, has responded sharply to Fed policy decisions in recent quarters. Rate holds have sometimes prompted selloffs, while cuts have often fueled rallies. For instance, December 2024’s quarter-point reduction coincided with Bitcoin’s climb toward $108,000. By contrast, March 2025’s rate…

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Filed under: News - @ May 7, 2025 11:28 am