- Bitcoin is hovering below $85,000 as tensions between President Trump and Fed Chair Powell add market uncertainty.
- Trump has reportedly been discussing firing Powell for months, with odds of removal rising to 19% on prediction markets.
- Traders are positioning with both bullish calls and downside protection amid heightened market volatility.
Bitcoin remained below $85,000 on Thursday as growing friction between President Donald Trump and Federal Reserve Chair Jerome Powell introduced fresh uncertainty to financial markets. This political tension, combined with concerning economic data, has kept crypto investors cautious while still maintaining prices near recent highs.
Markets dipped Wednesday after Powell criticized Trump’s tariff policy, warning it could lead to stagflation—a problematic combination of slow economic growth and rising prices. Powell emphasized that controlling inflation would remain his priority, suggesting tighter monetary policy could be ahead.
The conflict deepened as The Wall Street Journal reported Thursday that Trump has privately discussed firing Powell for months, according to people familiar with the matter. Former Fed Governor Kevin Warsh has reportedly been considered as a potential replacement, though both Warsh and Treasury Secretary Scott Bessent have advised against removing Powell, which could destabilize markets.
Economic Concerns Build
The stakes have risen as prediction markets reflect growing uncertainty. Odds of Powell’s removal this year on blockchain-based platform Polymarket reached 19%, their highest level since the contract launched in January.
Adding to market pressures, Thursday’s Philadelphia Fed manufacturing index showed activity plummeting to its lowest level (-26.4) in two years. Meanwhile, the prices paid index reached its highest reading since July 2022, reinforcing concerns about stagflation risks from the administration’s tariff policies.
This came as the European Central Bank cut interest rates for the seventh consecutive time while warning about deteriorating economic growth prospects. Stock markets responded cautiously, with the S&P 500 and Nasdaq trading mostly flat.
Bitcoin Traders Seek Balance
Despite the uncertainty, Bitcoin has stabilized between $83,000 and $86,000 as traders pursue a two-sided strategy. According to Deribit’s market update, investors are actively purchasing call options at the $90,000 to $100,000 strike prices expiring in May and June, indicating expectations for continued price growth.
However, traders are simultaneously showing renewed interest in downside protection through $80,000 put options expiring this month. This cautious positioning reflects the broader market sentiment, with Wall Street’s fear gauge (VIX) remaining elevated above its 50-day average.
“The VIX is warning that the macro situation is still unraveling rather than resolving,” Deribit noted on X. In the broader crypto market, Bitcoin and Ethereum were both up 0.8% over 24 hours, with Bitcoin Cash, NEAR and AAVE leading gains among top digital assets.
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