Fed’s Next Move: How Jerome Powell Holds the Keys to Bitcoin’s Future

The Federal Reserve’s policy decisions under Jerome Powell could make or break Bitcoin’s trajectory—again. Here’s why crypto traders are glued to every word from the Eccles Building.

Rate cuts? QT tapering? Even whispers of dovishness send BTC volatility soaring. Meanwhile, Wall Street still pretends it ‘discovered’ digital assets last week.

One thing’s clear: In the high-stakes game between hard money and monetary printers, Bitcoin’s proving it won’t be ignored. The Fed might not like that.

Fed Waller alludes to interest rate hikes

In a recent statement, Fed Governor Christopher Waller hinted at the possibility of interest rate cuts by the end of 2025. 

This statement came as the total crypto market capitalization slipped from over $3.5 trillion to just above $3.2 trillion in the last ten days, with Bitcoin [BTC] struggling to regain momentum after peaking near $112,000.

Waller noted, 

“I WOULD be supporting ‘good news’ rate cuts later this year.”

He went on to add, 

“I see downside risks to economic activity and employment and upside risks to inflation in the second half of 2025, but how these risks evolve is strongly tied to how trade policy evolves.”

What could be the Federal Reserve’s next step?

Popularly, Trump’s aggressive tariff manoeuvres intend to secure favorable trade terms for the U.S. However, they’ve also injected fresh volatility into an already turbulent crypto market.

Amid this uncertainty, investors are closely watching the Federal Reserve’s next steps.

Hence, if interest rates are lowered in the coming months, it could trigger a significant market upswing.

Remarking on the same, Fed Chair Jerome Powell noted, 

“It remains critical that the Fed understand the policies and practices of other governments and central banks, and their implications for the U.S. economy and financial markets. Exchange rate policy, of course, is now firmly in the hands of the U.S. Treasury.”

What’s more?

Needless to say, the Fed’s updated policy framework acknowledges the economic shifts since its last major review in 2020, emphasizing the need for a recalibrated tools and communication.

And yet, its response to surging inflation in 2022 dealt a harsh blow to crypto, slashing Bitcoin’s value by nearly 70% and wiping $2 trillion from the market.

Though 2023 brought a wave of recovery and renewed investor confidence, the crypto space remains sensitive to interest rate dynamics.

Therefore, as the Fed signals further strategic adjustments, the path forward for digital assets remains uncertain. It hinges heavily on future policy directions and the market’s reaction to them.