Bitcoin Stagnates at $85K as Trump Piles More Pressure on Fed’s Jerome Powell.

Bitcoin Holds Steady Near $85K as Trump’s Pressure on Powell Fuels Market Uncertainty

Bitcoin (BTC) remained relatively flat below $85,000 on Thursday, as growing tensions between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell further stirred uncertainty in the markets, adding to fears of stagflation.

The markets experienced a setback on Wednesday following hawkish remarks from Powell, who criticized Trump’s ongoing tariff strategy. Powell warned that the tariffs could lead to stagflation—an economic scenario marked by rising inflation and economic stagnation. In his statement, Powell signaled that controlling inflation was now his top priority, hinting at the possibility of tighter monetary policies than previously expected.

This mounting tension between Trump and Powell, whom Trump appointed during his first term, has been a recurring issue since Trump’s return to the White House. Powell, who is set to remain as Fed chair until 2026, has asserted that he intends to serve his full term, stressing that Trump has no authority to remove him.

On Thursday, the Wall Street Journal reported that Trump has been contemplating firing Powell for months, with former Federal Reserve Governor Kevin Warsh emerging as a potential replacement. However, Warsh has reportedly advised Trump against making such a move, and Treasury Secretary Scott Bessent has also cautioned that removing Powell could disrupt the markets and undermine the Fed’s independence.

Meanwhile, on the prediction market Polymarket, the probability of Trump removing Powell this year rose to 19%, the highest since the contract was launched in January.

The economic uncertainty deepened further as the European Central Bank (ECB) announced its seventh consecutive interest rate cut on Thursday, signaling growing concerns over Europe’s economic outlook.

Adding to the pressure, the Philadelphia Fed’s manufacturing index showed a sharp decline in economic activity, hitting its lowest level in two years. The prices paid index also surged to its highest level since July 2022, exacerbating fears that Trump’s tariff policies could drive the U.S. economy into stagflation.

The S&P 500 and the Nasdaq ended the day largely unchanged, reflecting investor hesitation amid ongoing economic uncertainty.

Bitcoin Traders Eye Mixed Strategies Amid Volatile Market Conditions

In the cryptocurrency space, Bitcoin and Ethereum (ETH) saw moderate gains of 0.8% over the past 24 hours. Other assets in the CoinDesk 20 Index, including Bitcoin Cash (BCH), NEAR, and AAVE, also showed positive price movements.

Bitcoin has managed to hold its ground between the $83,000 and $86,000 range, with traders displaying a mixed outlook. Some traders are positioning for a bullish rally, while others are preparing for potential downside risks.

On Deribit, demand for call options at the $90,000 to $100,000 strike prices, expiring in May and June, suggests expectations for continued upward momentum. These bullish bets are partly funded by premiums collected from selling put options, a common strategy to offset potential downside risks.

At the same time, there has been a noticeable uptick in the purchase of put options at the $80,000 strike price, reflecting concerns that Bitcoin’s price could fall further. A put option acts as insurance against declining prices, allowing traders to hedge their positions.

The fluctuating demand for both call and put options comes as the VIX, the volatility index, remains elevated, signaling that investors continue to anticipate heightened market uncertainty. Despite recent pullbacks, the VIX remains significantly above its 50-day average, indicating that the broader macroeconomic situation is far from stable.