Bitcoin Reclaims $98K After Fed Holds Rates Steady Despite Trump Pressure

Bitcoin Surges Back to $98K as Fed Maintains Interest Rates

Bitcoin surged to $98,000 on May 7, its highest level in nearly three months, after the U.S. Federal Reserve announced it would hold interest rates steady, resisting political pressure from former President Donald Trump to implement rate cuts.

Following the Fed's announcement, Bitcoin initially dipped to $95,866, but quickly rebounded to break through the $98,000 level—a price it hadn’t seen since February 21, 2025. The rally highlights growing investor appetite for risk assets, even amid heightened macroeconomic uncertainty and political tensions.

The crypto market’s reaction reflects the balancing act between monetary policy caution and a surge in capital flows into digital assets, including spot Bitcoin exchange-traded funds (ETFs), which have recorded inflows of over $4.41 billion since March 26.

Trump vs. Fed: Political Pressure and Policy Caution

The Fed’s decision to keep rates in the 4.25%–4.50% range defied pressure from Donald Trump, who has repeatedly criticized Fed Chair Jerome Powell in recent weeks. Trump accused Powell of being “too late” in cutting rates and even threatened to fire him if elected again.

Despite political pressure, Powell emphasized the central bank’s independence and reaffirmed its commitment to long-term price stability. Speaking at a press conference on May 7, Powell stated:

“Inflation has come down a great deal, but it has been running above our 2% longer-run objective. We are closely monitoring economic data before making any further adjustments.”

He also highlighted “a sharp decline in sentiment” among households and businesses, which he partially attributed to anxiety over Trump’s proposed trade and fiscal policies.

Fed Highlights Labor Market Strength and Inflation Risks

While acknowledging signs of slowing economic sentiment, Powell cited strong labor market data as a key reason for holding rates. He noted that unemployment remains low and the U.S. economy is operating “at or near maximum employment.”

Bitcoin fell below $96,000 before retracing back above $98,000 just hours later on May 7. Source: CoinMarketCap

However, the Fed is also closely watching persistent inflation risks, especially as volatile energy and housing costs weigh on consumer budgets.

Powell said the central bank is “well-positioned to wait for greater clarity”, repeating a cautious stance he shared in March. Market expectations now suggest the Fed may lower interest rates to 3.6% by the end of 2025, according to data from CME Group’s FedWatch Tool.

Bitcoin’s Bounce Driven by Market Sentiment and ETF Demand

While Powell’s comments initially spooked markets—causing Bitcoin to briefly dip below $97,000—the asset quickly regained steam as investor sentiment shifted. The Crypto Fear & Greed Index returned to “Greed” territory, indicating growing risk appetite among traders.

Bitcoin’s strength is also underpinned by surging ETF demand. Since the launch of several spot Bitcoin ETFs in late March, inflows have steadily climbed, with over $4.4 billion entering the space—a key driver of demand, especially among institutional investors.

Analysts view ETF inflows as a validation of Bitcoin's position in mainstream portfolios, particularly as a hedge against inflation and macroeconomic instability.

Economist Warns of Risks if Fed Delays Cuts Further

Not all experts are convinced the rally will sustain. Timothy Peterson, a network economist known for his Bitcoin valuation models, warned in March that if the Fed delays rate cuts deeper into 2025, it could trigger a broader market downturn—potentially dragging Bitcoin back toward $70,000.

“Markets may be overestimating the Fed’s willingness to ease,” Peterson said. “If clarity doesn’t come soon, we could see a sharp pullback across risk assets.”

Still, others argue that even in a high-rate environment, Bitcoin remains attractive due to scarcity post-halving, long-term adoption, and increasing institutional demand.

Conclusion: Bitcoin Rides Fed Decision with Political Tension in the Background

Bitcoin’s resurgence to $98,000 after the Fed’s rate decision signals a resilient appetite for digital assets despite macroeconomic headwinds and political pressure. While the Fed remains cautious amid inflation concerns, the crypto market appears to be betting that monetary easing—or persistent economic uncertainty—will continue to favor Bitcoin’s long-term trajectory.

As Washington debates economic direction and investors recalibrate expectations, Bitcoin may remain a barometer of both risk sentiment and policy anticipation throughout the rest of 2025.