Bitcoin Holds Steady Near $85K as Trump’s Pressure on Powell Raises Economic Fears
Bitcoin (BTC) remained stagnant just under $85,000 late Thursday, as mounting tensions between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell contributed to increasing market anxiety, further stoking fears of stagflation.
Markets saw a dip on Wednesday following Powell’s hawkish comments, where he criticized Trump’s trade tariffs, warning that they would likely lead to slower economic growth and rising inflation—characteristics of stagflation. Powell emphasized that his primary concern would be controlling inflation, signaling a potential tightening of Fed policies in the near future.
This growing clash between Trump, who nominated Powell as Fed chair during his first term, and Powell, who has reaffirmed his commitment to serving his full term, has been an ongoing source of tension. Powell is set to remain in his position until 2026, and despite Trump’s objections, Powell has stated that he will not resign.
According to a report by the Wall Street Journal, Trump has been privately discussing the possibility of removing Powell, with former Fed Governor Kevin Warsh emerging as a potential replacement. However, Warsh and Treasury Secretary Scott Bessent have reportedly advised Trump against pursuing such a move, warning that it could destabilize the already-fragile U.S. markets.
The odds of Trump removing Powell in 2025 saw a significant rise on the blockchain-based prediction market Polymarket, hitting 19%, the highest level since the contract was launched in January.
Meanwhile, the European Central Bank (ECB) added further pressure on global markets, cutting interest rates for the seventh consecutive time, citing a deteriorating growth outlook in the Eurozone.
Additionally, the Philadelphia Fed’s manufacturing index showed a sharp drop, falling to its lowest level in two years. The report also revealed a significant rise in the prices paid index, fueling concerns that Trump’s tariffs are pushing the U.S. economy toward stagflation.
The broader stock markets, including the S&P 500 and Nasdaq, remained mostly flat amid the heightened uncertainty, as traders navigated the complex economic landscape.
Bitcoin’s Resilience Amid Market Volatility: Traders Hedge and Bet on Price Movements
Bitcoin’s price has remained relatively stable between $83,000 and $86,000, as traders continue to take mixed positions. While some are placing bullish bets, anticipating further price increases, others are securing downside protection in case the market turns bearish.
On Deribit, there has been increased demand for call options with strike prices between $90,000 and $100,000, expiring in May and June, signaling that many traders expect a continued rally in Bitcoin’s price. These bullish positions are often funded by the premiums collected from selling put options, which act as a hedge against price declines.
Simultaneously, there has been a notable uptick in the purchase of put options with a $80,000 strike price, set to expire later this month, reflecting concerns that Bitcoin’s price could dip further. Put options provide traders with insurance against falling prices, allowing them to protect their positions.
The fluctuation in demand for both call and put options is happening against the backdrop of an elevated VIX, the so-called “fear index,” which remains significantly above its 50-day average. This suggests that investors are anticipating continued volatility in the broader markets, indicating that economic uncertainty is still very much in play.
