Below is a detailed analysis of how factors from the FOMC meeting on May 7, 2025, and Chairman Jerome Powell's remarks could influence Bitcoin (BTC) prices:
1. Fed maintains interest rates:
Expected impact on BTC: Slightly positive
Reason: The Fed's decision not to raise interest rates is a 'dovish' signal in the short term. This helps maintain a liquidity environment that is not further tightened, supporting risk assets like Bitcoin.
2. Inflation remains above target:
Expected impact on BTC: Neutral to slightly negative
Reason: Core inflation remains above 2.6% and has not reached the 2% target, which decreases the likelihood of the Fed cutting rates soon. If the market expects rate cuts and that does not happen, BTC may face selling pressure.
3. GDP declines and stagflation risk:
Expected impact on BTC: Complex – depends on market sentiment
Reason: Slow growth + high inflation (stagflation) creates an uncertain environment. Some investors may turn to BTC as a 'safe haven' against outdated monetary policies and economic instability; others may take profits due to increased systemic risk concerns.
4. Chairman Powell's cautious remarks:
Expected impact on BTC: Depends on the tone
Powell did not send a clear signal about rate cuts, emphasizing the need for more data → this is a neutral to slightly 'hawkish' tone.
This leads investors to expect the Fed to be 'patient', not to accelerate rate cuts → BTC may experience slight adjustments after recent surges.
5. Actual market impact after the meeting (short term):
U.S. stocks initially rose but then turned lower → indicating that the market is not yet confident, with no clear signals about easing.
BTC may also react similarly: strong fluctuations, may initially rise then adjust.
Summary of overall impact on BTC:
Factors Impact Brief explanation
Maintain interest rates Slightly positive No further tightening
High inflation Slightly negative Fed struggles to cut rates early
GDP decline Neutral Concerns about growth
Powell's cautious remarks Slightly negative Not as dovish as expected
Market reaction High volatility Lack of solid confidence