Bitcoin (BTC) Price Stagnates at $85K Amid Trump’s Mounting Pressure on Fed Chair Powell
Bitcoin (BTC) was holding steady just below $85,000 late Thursday as tensions between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell introduced further uncertainty for investors. Markets dipped on Wednesday following Powell’s hawkish comments, where he criticized Trump’s tariff policy, warning that it could lead to a slowing economy and rising prices — a scenario known as “stagflation.” Powell emphasized his primary focus on price stability, indicating a potentially tighter monetary policy than previously anticipated.
Trump, who appointed Powell during his first term (and Powell was later reappointed for a second term by President Biden), has expressed dissatisfaction with Powell since regaining the presidency. Despite this, Powell, who is expected to remain in his position until May 2026, has reaffirmed his commitment to complete his term and suggested that the president lacks the authority to dismiss him.
On Thursday, reports emerged from the WSJ that Trump has been privately contemplating Powell’s removal for several months, according to sources familiar with the discussions. Former Fed Governor Kevin Warsh is said to be a potential successor however, he has advised the president against making any changes to the Fed chair, according to the same report. Treasury Secretary Scott Bessent also cautioned that such a move might destabilize already fragile U.S. markets, emphasizing the need for central bank independence from political pressures.
The likelihood of Trump displacing Powell this year saw a rise to 19% on blockchain-based prediction markets, the highest figure since the contract’s inception in late January. Trump’s remarks coincided with the European Central Bank (ECB) cutting key interest rates for the seventh consecutive time on Thursday, citing a deteriorating growth outlook.
Market pressures were further compounded by the Philadelphia Fed manufacturing index, published Thursday morning, which reported a significant drop in activity this month, falling to its lowest level (-26.4) in two years. Additionally, the prices paid index surged to its highest level since July 2022, intensifying concerns regarding the ramifications of the Trump administration’s extensive tariff policies that could be pushing the U.S. economy toward stagflation.
The S&P 500 and tech-heavy Nasdaq stock indexes showed little movement throughout the day. In the crypto market, BTC and Ethereum’s ETH increased by 0.8% over the past 24 hours. Most assets within the CoinDesk 20 Index managed to trade higher, with bitcoin cash (BCH), NEAR, and AAVE registering the most significant gains.
How are bitcoin traders responding to heightened market anxiety? Bitcoin has remained stable between $83k and $86k, with traders pursuing bullish positions while simultaneously seeking downside protection. On Deribit, traders are actively buying calls at the $90k to $100k strike prices for May and June expirations, indicating expectations for a possible price rally. Some of these bullish positions have been financed by premiums acquired from selling put options.
Simultaneously, there is renewed interest in purchasing put options at $80k that expire this month, serving as a precautionary measure against potential price declines. Buying a put option is similar to securing insurance against adverse price movements. This varied activity comes as the VIX, Wall Street’s gauge of fear measuring 30-day implied volatility, remains significantly above its 50-day average, despite a pullback from recent highs above 50. The VIX indicates that the macroeconomic landscape is still unfolding rather than stabilizing, according to updates from the exchange on X.
