Bitcoin week ahead: all eyes on Powell's testimony, core PCE data, and the expiration of Trump's tariffs
AI Summary
Federal Reserve policy, inflation data, and rising geopolitical risks could trigger BTC volatility this week
Key Takeaways:
Fed Chair Jerome Powell will testify before Congress this week amid rising political pressure for a rate cut.
Core PCE inflation data to be published on Friday is expected to show moderate price increases, reinforcing rate cut bets.
Trump's tariff pause ends on July 9, which could reintroduce inflation risk and impact Fed policy.
Bitcoin remains resilient above $100,000 despite tensions in Iran and global macroeconomic uncertainty.
Markets are preparing for signals from the Fed as Powell heads to Capitol Hill
Bitcoin opens the week above $101,000 as traders focus on macroeconomic headwinds that could affect global risk sentiment. Key event: testimony from Federal Reserve Chair Jerome Powell before Congress, where he is likely to defend the Fed's independence and the delay in rate cuts.
As inflation declines and cracks appear in the labor market, some Fed officials — including Trump appointee Christopher Waller — have hinted at a possible rate cut in July. This has raised expectations for a softer tone from Powell.
“Early cracks in the labor market and weak activity in construction support the case for a shift in July,” said Chris Weston, head of research at Pepperstone. “Markets are already pricing in two rate cuts this year, with attention on September.”
Powell's testimony comes amid political pressure from President Trump, who continues to blame the Fed for high borrowing costs, saying Powell "costs the country hundreds of billions."
The release of key PCE data on Friday will be crucial
The Core Personal Consumption Expenditures (PCE) index — the Fed's preferred inflation gauge — will be released on Friday. The consensus predicts a 0.1% increase compared to the previous month in May, pushing the annual core PCE to 2.6% and the three-month annualized rate to 1.6%, signaling a soft policy.
However, there is one caveat. Tariffs set to take effect in July could reverse the downward trend. ING warns that the full inflation impact of Trump’s ‘D-Day’ tariffs will not materialize until Q3, which could delay deeper cuts.
“Whether tariffs will cause a temporary shock or persistent inflation will not be clear until December,” analysts at ING said. “This makes one rate cut in 2025 more likely unless job data worsens further — in that case, we could see a cut of 50 bps.”
Trump's tariff expiration is approaching
Trump's 90-day pause on mutual tariffs ends on July 9. New tariffs — unless postponed — will take effect, increasing price pressure just as inflation appears to be starting to decline.
So far, the UK and China have agreed on partial deals, but the European Union has not responded, adding more uncertainty to global trade and its inflationary consequences.
Geopolitical Risks: Iran and Oil Markets
Tensions in the Middle East remain high following US airstrikes on Iran's nuclear facilities, but oil prices remain stable — for now. Analysts warn that Iran could disrupt oil markets without a full-scale conflict.
“Iran does not need to close the Strait of Hormuz — just the threat of this increases shipping insurance costs,” Weston said.
The cost of insuring ships through the vital oil corridor has risen from $0.20 to $0.80 per barrel, according to Xclusiv Shipbrokers, increasing pressure on global oil supply chains.
Outlook for Bitcoin
Despite macroeconomic and geopolitical headwinds, Bitcoin has remained above $100,000, and some traders are watching for a recovery of bullish momentum if the Fed hints at soft policy.
Order book data from CoinGlass indicates that BTC may be poised for a short squeeze, especially if soft tones emerge from Powell or PCE data on Friday confirms disinflation.
“Order books are tilting towards bids — traders are positioning for a drop, making BTC vulnerable to a squeeze,” said Skew analyst.
Bitcoin shows resilience as a risk asset and hedge, with Powell's testimony and inflation data on Friday likely to set the tone for the week ahead.