Bitcoin Reacts as Donald Trump Says the Fed Would Be Better Off Cutting Interest Rate
March 20, 2025
Trump and Bitcoin
Pro-Bitcoin US President Donald Trump has nudged the Central Bank to resume funding rate cuts as tariff implementations transition into the economy. He made the call in a Truth Social post on Wednesday, shortly after the FOMC meeting. Trump insisted that cutting interest rates was the best thing the Federal Reserve System (Fed) should do amid extensive tariff hikes.
President Donald Trump on Truth Social
Notably, the president noted he would resume implementing new tariffs on most imports into the US starting from April 2, a date he termed “Liberation Day in America.” With plans in place, Trump nudged the Fed to resume rate cuts, arguing it was the right thing to do and the bank would be better off taking the approach.
Meanwhile, the post came on the day that the Fed left rates unchanged. At Wednesday’s FOMC meeting, Chair Jerome Powell maintained the current interest rate, with Bitcoin and the broader market rebounding extensively from the development.
Trump and Fed’s Dovish Tone Sends Bitcoin Surging
While Powell announced an unchanged funding rate on March 19, his bullish tone, alongside Trump’s urge to start cutting rates, sent Bitcoin soaring. The pioneering cryptocurrency rallied 5% to an intraday high of $87,482, a price level it saw almost two weeks ago.
For perspective, the Fed maintained a target funding rate range of 4.25% and 4.5% yesterday despite revising inflation up to 2.8%. The agency also disclosed a slower economic growth of 1.7% this year, down from 2.1% in December, citing the ripple effect from Trump’s tariff hikes.
Nonetheless, Powell disclosed the Central Bank intends to cut rates twice in 2025 by 50 basis points. He also revealed plans to reduce the monthly Treasury redemption cap to $5 billion from $25 billion but maintain that of agency debt and mortgage-backed securities at $35 billion.
This dovish development spurred a much-needed Bitcoin rebound. Notably, the broader US market also received bullish momentum, with the S&P 500, Dow 30, and Nasdaq 100 spiking considerably.
What Next for Bitcoin?
Meanwhile, analysis suggests the bounce could trigger more upsides for Bitcoin in the near term. Despite speculations that the bull cycle might be over, the expected rate cuts and the surging M2 money supply could provide strong macroeconomic bullish momentum for the largest cryptocurrency by market cap.
Moreover, leading US bank Wells Fargo recently predicted a rebound for Bitcoin, citing a slump in the US dollar’s strength. The institution linked the recent downside with a growing dollar dominance in Q4 2024, and the currency’s reversed trend could signal a change in narrative for Bitcoin and altcoin prices.
Notably, analyst Ali Martinez suggested that Bitcoin must reclaim $93,700 as support for a sustainable upward trajectory. If it does, the prominent market watcher predicted a surge to $110,000.
At the time of writing, Bitcoin trades at $85,885, down 1% today and 9% away from the crucial level.
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