Bitcoin Stays Above $100K as Traders Brace for Powell, Inflation Data, and Tariff Tensions
Bitcoin is holding steady above $100,000, defying predictions of a sharp drop after the U.S. conducted airstrikes on Iranian nuclear facilities. With geopolitical fears cooling for the moment, attention is shifting to a critical week of economic events that could steer both crypto and traditional markets.
Powell’s Testimony in the Spotlight
A key event this week will be Federal Reserve Chair Jerome Powell’s semi-annual testimony before Congress. Powell is expected to face sharp questioning from Republican lawmakers who have criticized the Fed’s cautious approach to rate cuts. Former President Donald Trump has repeatedly attacked Powell on social media, accusing him of damaging the economy and costing the country hundreds of billions of dollars.
Despite political heat, Powell is likely to emphasize the Fed’s independence and data-driven stance. Markets are eager for clues on whether the Fed is preparing to pivot toward looser policy.
Fed Governor Christopher Waller, appointed by Trump, recently signaled that rate cuts could start as soon as July, heightening speculation around the Fed’s next steps.
“With inflation expectations contained, cracks emerging in the labor market, and housing still soft, there’s a solid argument for a dovish shift at the July Fed meeting and possibly a hint at a September cut,” said Chris Weston, head of research at Pepperstone, on X. “Markets have already priced this scenario into swaps.”
A dovish Powell could spark renewed appetite for risk assets, potentially giving bitcoin another boost.
Diverging Views on Rate Cuts
Markets are pricing in two quarter-point rate cuts this year, but analysts remain divided.
“We suspect clarity on whether tariffs will create a lasting inflation problem might not arrive before the December Fed meeting,” ING analysts said Friday. “That leaves room for just one cut in 2025, unless labor market weakness deepens and forces the Fed’s hand toward a larger 50-basis-point move.”
Core PCE Inflation Data Could Tip the Scales
Another major focus is Friday’s release of the core personal consumption expenditures (PCE) price index—the Fed’s preferred measure of inflation. Economists anticipate a modest 0.1% monthly increase for May, translating to a 2.6% annual pace and a three-month annualized rate of 1.6%, according to Pepperstone’s projections.
A softer-than-expected reading would reinforce hopes for rate cuts. Yet ING warns that Trump’s proposed tariffs could reintroduce upward pressure on prices later this year.
Trump’s 90-day pause on reciprocal tariffs, announced in April, expires on July 9. Unless new deals are finalized, sweeping “Liberation Day” tariffs will take effect. Trump has so far secured an agreement with the U.K. and outlined a framework with China, though Beijing has not formally signed, and discussions with the EU remain unresolved.
Iran Still a Potential Flashpoint
While oil markets have calmed for now, geopolitical risks linger. Iran has refrained from blocking the Strait of Hormuz—a vital waterway for about 20% of global oil—but the mere threat of disruption has already driven shipping insurance costs higher, rising from 20 cents to 80 cents per barrel, according to the South China Morning Post, citing Athens-based Xclusiv Shipbrokers.
“Iran doesn’t need to physically block the strait to cause trouble. Just creating enough doubt about the region’s security can spike shipping costs and disrupt oil and gas flows,” Weston noted.
As traders head into a pivotal week, bitcoin’s ability to stay above $100,000 signals resilience. However, upcoming remarks from Powell, inflation data, and looming tariff deadlines all stand to sway the crypto market’s next big move.
