Mixed economic data from the U.S. strengthened expectations that the Fed may cut interest rates in May, which is interpreted as a positive development for Bitcoin (BTC).
The latest data released on the U.S. economy has led to confusion in the markets. In the first quarter, the country's economy unexpectedly contracted by 0.3%, while job growth in the private sector was only 62,000, significantly below expectations. This weak picture has increased the likelihood that the Federal Reserve (Fed) may opt for an interest rate cut at its May meeting.
The Personal Consumption Expenditures (PCE) inflation, closely monitored by the Fed, increased by 2.3% year-on-year, coming close to expectations, while the Core PCE, which excludes food and energy prices, decreased to 2.6%. Following the release of economic data, Bitcoin briefly fell below $94,000, and an approximate 4% decline was observed across the market. Leading altcoins such as Ethereum (ETH) and Solana (SOL) were also affected by this decline.
Interest rate opportunity for Bitcoin
David Hernandez, an expert from the cryptocurrency investment firm 21Shares, emphasized that market expectations for Fed interest rate cuts have strengthened. Hernandez stated, "Fed futures currently indicate the possibility of 4 or more interest rate cuts occurring within this year. As signs of economic slowdown increase, maintaining inflation under control could push the Fed towards looser policies."
Dr. Kirill Kretov from CoinPanel stated that expectations for interest rate cuts and the falling dollar will be supportive for Bitcoin. According to Kretov, low bond yields and loose monetary policy create a positive macro environment for Bitcoin. Additionally, the Trump administration's pressure on the Fed for interest rate cuts is increasing Bitcoin's potential for growth.
The highly anticipated interest rate decision by the Fed will be announced on May 6-7 and is critically important for cryptocurrency markets.