Federal Reserve Nightmare Unfolds As Bitcoin Surges Towards $100,000
The bitcoin price has surged towards $100,000 per bitcoin, soaring to levels not seen since before the markets’ tariff tantrum. According to analysts, this surge is a nightmare come true for the Federal Reserve, as the US economy teeters on the verge of recession and sticky inflation.
As reported by Forbes Digital Assets, the bitcoin price has added almost 30% since crashing to April lows, as fears swirl around the future of the US dollar. The surge in bitcoin has come as the US economy has posted its worst quarterly performance in three years, with GDP contracting at a 0.3% annualized rate in the first quarter.
"The Fed’s worst nightmare just got worse," analysts with The Kobeissi Letter posted to X. "The market knows that stagflation has arrived." The analysts pointed to the latest reading of the Fed’s preferred measure of inflation, the personal consumption expenditures (PCE) price index, which was unchanged in March after advancing 0.4% in February.
According to Forbes Digital Assets, "The PCE price index is now at its highest reading since July 2024, before the ‘Fed pivot’ began." Kobeissi analysts wrote that "We have rising inflation with a weakening economy. The Fed is facing the lose-lose situation they thought would never arrive."
The Federal Reserve will meet next week to decide whether to change interest rates, with the market currently predicting it will leave rates on hold. However, traders are betting the Fed will begin cutting in June, something that’s expected to boost the bitcoin price and risk assets. "For bitcoin, such a scenario is a positive factor, since the easing of monetary policy traditionally leads to an influx of liquidity into risky assets," Tracy Jin, chief operating officer of bitcoin and crypto exchange MEXC, said in emailed comments.
As noted by Forbes Digital Assets, bitcoin’s performance in recent months has been remarkable, with the bitcoin price surging back through April to make it one of the year’s better performing assets so far. "Since president Trump’s Liberation Day announcement, bitcoin has charted its own course, surging past $90,000 and demonstrating remarkable resilience against the headwinds affecting traditional markets," David Hernandez, crypto investment specialist at 21Shares, said via email.
The surge in bitcoin has significant implications for the US economy and the Federal Reserve’s monetary policy. As Forbes Digital Assets reported, "This outperformance relative to the Nasdaq represents a significant departure from historical patterns. As the impacts of president Trump’s tariff policies begin to materialize more fully across the economy, we anticipate bitcoin could further disassociate from equities. The asset shows strong potential to outperform other risk assets as investors seek hedges against policy-driven market volatility."
In conclusion, the bitcoin price surge towards $100,000 per bitcoin is a nightmare come true for the Federal Reserve, as the US economy teeters on the verge of recession and sticky inflation. As reported by Forbes Digital Assets, the surge in bitcoin has significant implications for the US economy and the Federal Reserve’s monetary policy, and it will be interesting to see how the Fed responds to this development in the coming weeks and months.
