The Fed’s worst nightmare may be getting worse as Bitcoin continues its climb toward the $100,000 mark. This week, Bitcoin surged to levels not seen since before the markets' tariff concerns, driven in part by expectations of a $10 trillion surprise from Wall Street.

The price of Bitcoin has risen nearly 30% since its April dip, as concerns grow over the future of the U.S. dollar. “The market knows that stagflation has arrived,” analysts from The Kobeissi Letter posted on X.

Commerce Department data revealed that U.S. GDP for Q1 contracted at a 0.3% annualized rate, impacted by a historic spike in imports. The Kobeissi team also highlighted the Fed’s go-to inflation measure—the PCE price index—which remained flat in March after a 0.4% rise in February. This marks its highest level since July 2024, before the Fed began its policy pivot.

Last September, Fed Chair Jerome Powell surprised the markets by cutting interest rates, starting a policy easing cycle that has since paused. Kobeissi researchers have repeatedly flagged the threat of stagflation, the mix of rising inflation and a slowing economy. “The Fed is now in a lose-lose scenario they hoped to avoid,” they wrote after the latest economic data.

With the Fed’s next meeting around the corner, markets are predicting interest rates will remain unchanged. However, many traders expect rate cuts to start in June—a move that could drive Bitcoin and other risk assets even higher. Tracy Jin, COO of MEXC, noted, “Monetary easing usually brings more liquidity into riskier assets, which is good news for Bitcoin.”

Bitcoin’s recent rebound has impressed traders. After dipping earlier this year alongside equities, the cryptocurrency has surged past $90,000, outperforming many traditional assets. David Hernandez of 21Shares pointed out that since Trump’s “Liberation Day” announcement, Bitcoin has shown resilience despite broader market headwinds. “As the economic effects of Trump’s tariff policies unfold, Bitcoin may continue to decouple from equities and attract investors as a hedge against policy-driven volatility.”

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