Bitcoin Holds Steady at $85K While Trump Escalates Criticism of Fed’s Powell.

Bitcoin Holds Steady Below $85K as Stagflation Concerns Mount Amid Trump-Powell Conflict

Bitcoin (BTC) hovered just below $85,000 on Thursday as the ongoing clash between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell contributed to growing market uncertainty.

On Wednesday, the market reacted negatively to comments from Powell, who took aim at Trump’s tariff policies, warning that they could lead to an economic slowdown and rising inflation—characterized as “stagflation.” Powell highlighted inflation control as his top priority, signaling a potentially tighter stance from the Federal Reserve than previously expected.

The tension between Trump and Powell has escalated since Trump returned to the presidency. While Trump nominated Powell for his first term, he has publicly criticized Powell’s approach to monetary policy. Despite this, Powell is set to remain at the Fed until 2026 and has firmly stated that he plans to complete his term, asserting that Trump cannot remove him from office.

On Thursday, The Wall Street Journal reported that Trump has been privately considering firing Powell for months, with former Fed Governor Kevin Warsh reportedly in line to replace him. However, Warsh has cautioned Trump against removing Powell, with Treasury Secretary Scott Bessent adding that such a move could destabilize U.S. markets due to the Fed’s intended independence from political pressure.

As of late Thursday, the probability of Trump attempting to oust Powell this year had risen to 19%, according to blockchain-based prediction market Polymarket, the highest since the market’s launch in January.

Trump’s remarks came amid additional market pressures, including the European Central Bank’s decision to cut key interest rates for the seventh consecutive time, citing worsening growth prospects in the eurozone.

In the U.S., the Philadelphia Fed’s manufacturing index revealed a sharp decline in activity, falling to its lowest level in two years. Meanwhile, the prices paid index reached its highest point since July 2022, raising concerns that Trump’s tariffs could exacerbate inflation and contribute to stagflation.

The S&P 500 and Nasdaq indexes traded flat throughout the day, reflecting the ongoing market uncertainty.

Bitcoin and Crypto Market Action: BTC Stabilizes, Traders Hedge for Upside and Downside

In the crypto markets, Bitcoin and Ethereum (ETH) saw moderate gains of 0.8% over the past 24 hours. Other assets in the CoinDesk 20 Index also traded higher, with Bitcoin Cash (BCH), NEAR, and AAVE leading the charge.

Bitcoin’s price has found support between $83,000 and $86,000, as traders place bullish bets while simultaneously hedging for potential price drops.

Deribit noted that a significant number of traders have been purchasing call options at the $90,000 to $100,000 strike prices expiring in May and June, signaling a belief in further price increases. These positions are often funded by premiums collected from the sale of put options, which serve as a hedge against potential price declines.

At the same time, there has been renewed interest in purchasing put options at the $80,000 strike price for expiry later this month, reflecting caution and preparing for downside risks. Buying put options functions as insurance against price decreases.

This dual action in the options market comes as the VIX, which measures implied market volatility, remains elevated, staying well above its 50-day average. Despite the recent pullback from higher levels, the VIX’s elevated readings suggest continued uncertainty in the broader economic environment.