Fed Rate Cuts Incoming: Is Bitcoin Poised for a Breakout?

While the American consumer price index (CPI) shows a slight easing in inflation, Bitcoin is holding its breath. At 3.1%, the figure is below expectations, but the king of crypto paradoxically plunges from $84,000 to $83,000 in just a few hours. A paradox? Not really. Between hopes for interest rate cuts and political maneuvering, the landscape is becoming more complex. Here’s a breakdown of a scenario where Bitcoin, lying in wait, could surprise the markets.

The Fed, inflation, and Bitcoin: a three-step tango

The American CPI, a measure of inflation, has slightly weakened to 3.1%, below the anticipated 3.2%. Good news? On the surface. But for Matt Mena, a strategist at 21Shares, this slowdown paves the way for interest rate cuts. Markets are now betting on a 31.4% chance of a cut in May, compared to barely 10% a month earlier. Three cuts by the end of 2025? The odds have quintupled.

An accommodating monetary policy would inject massive liquidity, favorable to volatile assets like Bitcoin.

Historically, interest rate cutting cycles coincide with crypto rallies. Yet, BTC is retreating today. Why? Traders are juggling other uncertainties: Trump’s trade war, geopolitical tensions, and a more cautious Fed timing than expected.

Bitcoin is hovering around $83,000, torn between monetary optimism and market realism. Jerome Powell, head of the Fed, emphasizes that “it is too early to declare victory over inflation.”

Christopher Waller, a governor, adds: “No rush.” The result? Investors are holding back, but keeping an eye on the macro calendar. Any confirmation of easing could trigger historic FOMO.

Trump, debt, and the art of manipulating the markets

What if the market crash was… intentional? This is the bold thesis of Anthony Pompliano.

According to him, Trump would let the indices dive to force the Fed to lower rates. A political failure? No. A cold calculation: $9.2 trillion in American debt is due by 2025. Without refinancing at low rates, interest would explode, undermining the economy.

The Kobeissi Letter warns: refinancing $36 trillion in debt at high rates would be catastrophic. For Trump, an interest rate cut is vital — even at the cost of a temporary stock market crash. The markets, aware of the risk, are already anticipating a reversal from the Fed. Bitcoin, often seen as an hedge against monetary drift, could capitalize on this orchestrated chaos.

In this tug-of-war between politics and economics, Bitcoin plays an unprecedented role. Neither a traditional asset nor simple speculation, it embodies an alternative to weakened systems. If the Fed yields to pressure, the influx of liquidity could propel it beyond $100,000 despite a timid rebound. But in case of prolonged resistance, the turbulence will offer buying opportunities at bargain prices.