Fed Chair Jerome Powell is preparing to testify before Congress and the Senate amid market instability. Bitcoin has dropped to $98.5K, and investors are seeking clarification on rate cuts and inflation risks.
Under Pressure: Calls for Rate Cuts
Powell is facing pressure from both sides of the aisle after the Fed decided to keep interest rates steady at 4.25%-4.5% in June. President Donald Trump criticized this cautious stance, demanding deep cuts of 2-3%. Senator Elizabeth Warren and Fed Governors Michelle Bowman and Christopher Waller are also urging for a cut as early as July. According to CME FedWatch data, the odds of a July cut stand at 23%, while chances for a September cut are much higher at 82%. Powell's testimony is expected to clarify why the Fed is still holding back despite growing demands.
Crypto Market Faces Pressure from Tariffs
The crypto market is in rough shape. Bitcoin has dropped to a multi-month low, and altcoins are deep in the red. Much of this stems from fears around Trump's proposed trade tariffs, which have added more uncertainty to an already fragile economy. Powell is expected to discuss how these tariffs might impact the Fed's decisions. If he leans toward easing rates, crypto prices could bounce. But if he sticks to a cautious tone, the U.S. dollar could strengthen, which usually means more pain for digital assets.
Middle East Conflict Raises Inflation Fears
Recent U.S. airstrikes in Iran have pushed oil and gold prices higher, raising fresh concerns about inflation. The ongoing conflict between Israel and Iran is also raising the risk of a potential closure of the Strait of Hormuz, a key global shipping route. If that happens, fuel prices could skyrocket, making it harder for the Fed to meet its inflation goals. Powell's comments on these risks will be watched closely, as they could shape expectations for interest rate policy through the rest of 2025.
Powell's upcoming remarks could be a turning point. Investors want to know if he will signal relief with rate cuts or continue to play it safe. Whatever he says, the outcome is likely to shape the market's direction for months to come, especially in crypto.
