The Fed’s Speech Today : How Will It Affect the Crypto Market ?

Crypto Market Anticipates Powell’s Speech

The crypto market is holding its breath as the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve wraps up its two-day meeting on May 7, 2025.

While a change in interest rates seems unlikely, all eyes are on Fed Chair Jerome Powell’s speech. His comments on inflation, economic growth, and the future trajectory of interest rates could trigger significant movements in Bitcoin (BTC) and the entire crypto asset market.

As this crucial deadline approaches, Bitcoin is hovering in a narrow range between $93,000 and $97,800, reflecting investor caution. This tight range mirrors uncertainty about the signals the Fed might send.

According to futures market data, there is a 99% probability of rates remaining in the current range of 4.25% to 4.50%. However, it’s not the decision itself but shifts in Powell’s speech that could sway the market.

The macroeconomic context is particularly tense. Fears of stagflation – a toxic combination of slow economic growth and persistent inflation – are mounting. These concerns are fueled by factors such as discussions about proposed new tariffs by the Trump administration, which could exacerbate inflationary pressures while dampening economic activity.

In this scenario, the Fed faces a delicate trade-off: maintain high rates to curb inflation, risking stifling growth, or ease its monetary policy, which could reignite price hikes.

Scenarios and Their Impact on Crypto

The tone set by Jerome Powell during his press conference will be crucial. Here are the two main scenarios being considered and their implications for the crypto market:

• A Dovish Speech : If Powell adopts an optimistic tone, suggesting that inflation is under control or that a rate cut could occur sooner than expected, risk assets, including cryptocurrencies, could benefit. Such a speech would signal a more favorable monetary environment for speculative investment. In this case, Bitcoin could break through the $97,000 resistance, potentially heading towards $100,000, a key psychological level. Altcoins, often more volatile, could amplify this movement, with significant gains for assets like Ethereum (ETH) or Solana (SOL).

Analysis : Historically, periods of monetary easing (such as in 2020 with near-zero rates) have coincided with major rallies in the crypto market. A dovish speech could also weaken the U.S. dollar, strengthening the appeal of Bitcoin as an alternative store of value.

• A Hawkish Speech : Conversely, if Powell emphasizes the need to maintain a strict monetary policy to counter persistent inflation, the market could take a hit. A firm stance would increase pressure on risk assets, including cryptocurrencies. Bitcoin could then fall back to its $92,000 support, or even test lower levels around $90,000 if selling accelerates. Altcoins, more sensitive to market sentiment changes, could experience sharper corrections.

Analysis : A hawkish Fed would maintain a high-rate environment, making traditional assets like bonds more attractive compared to speculative cryptos. This could also strengthen the dollar, exerting additional pressure on BTC.

Despite publicly firm rhetoric, recent actions by the Fed send conflicting signals. The slowdown in quantitative tightening (QT), the modest reduction of the Fed’s balance sheet, and discreet Treasury bond purchases suggest a potential shift towards a more accommodative policy in the future.

These measures, though subtle, are interpreted by some analysts as preparations for future easing, possibly as early as the second half of 2025.

For the crypto market, even implicit signals could dampen downward pressures. Institutional investors, increasingly present in the crypto ecosystem, are monitoring these cues to adjust their strategies. For example, the rising adoption of Bitcoin ETFs in the U.S. shows that BTC is increasingly seen as a diversification asset, even in a high-rate environment.

What to Expect After the Speech ?

Jerome Powell’s speech, scheduled for May 7, 2025, at 2:30 PM (New York time), will act as a major catalyst for the crypto market. Increased volatility is expected in the hours following the announcement, with traders quickly adjusting their positions. Here are some key points to watch :

• Keywords in the Speech : Any mention of “controlled inflation” or a “pause in tightening” could trigger a rally. Conversely, terms like “persistent inflation” or “increased vigilance” could weigh on the market.
• Reactions from Other Markets : A drop in stock indices (S&P 500, Nasdaq) or a rise in bond yields (10-year Treasury) could signal a bearish sentiment, impacting cryptos.
• Trading Volumes : An increase in volumes on platforms like Binance or Coinbase after the speech will indicate the extent of the market’s reaction.

In conclusion, the cryptocurrency market is at a turning point, hanging on Jerome Powell’s words. His speech could not only define Bitcoin’s trend for the second quarter of 2025 but also influence the overall dynamics of crypto assets. In a complex macroeconomic environment, marked by risks of stagflation and geopolitical uncertainties, the Fed plays a central role in market psychology.

Market volatility is expected at the time of the announcement and in the hours that follow, with investors adjusting their positions based on new information.

More on this topic :

• Fed Announcement in Hours : Is Bitcoin at Risk ?
• 4 Key Drivers That Could Push Bitcoin to $100K by Month-End
• Will Bitcoin (BTC) Price Skyrocket Even Further This Week ?