Despite a higher-than-expected inflation report, Bitcoin remains steady around $80,800 at the time of writing. If the Producer Price Index (PPI) data due tomorrow mirrors this trend, even with Warsh stepping into his new role on Friday, markets are unlikely to see an interest rate cut at the upcoming Federal Reserve meeting in 36 days.
US market reaction to inflation
For April, seasonally adjusted US Core CPI rose by 0.4% month-over-month, exceeding the 0.3% forecast and marking the highest increase since January 2025. Meanwhile, headline inflation is returning to 2024 levels, a development that is unsettling for market participants.
Adding to market jitters, leading tech stocks in the US have come under selling pressure, dragging down the broader indices. The increasingly fragile ceasefire in the Middle East has pushed oil prices past $107 per barrel again, fueling further uncertainty.
After two consecutive record closes driven by gains in chipmaker stocks, Nasdaq 100 futures dropped by 0.7%. S&P 500 contracts also slipped by 0.3%. Meanwhile, Samsung and SK Hynix are expressing concerns over new tax increases targeting artificial intelligence revenues.
Following Trump’s rejection of Iran’s latest proposal and his suggestion that a prolonged ceasefire is unlikely, all eyes are now on the outcome of his upcoming discussions with China, and what he signals as his next move.
Bitcoin’s resilience and market risks
In a surprising move, Bitcoin is edging closer to the $81,000 mark, maintaining its ground despite disappointing macro data—a risky show of strength. Cryptocurrencies often defy expectations and have a history of moving sharply in the opposite direction when market signals seem clear. However, such momentum can quickly turn into a trap, so investors should not underestimate the risks. For example, ETH dipped below $2,300 as both crypto and equity market conditions signal the potential for further declines.
At 18:00, an interview with Trump is scheduled, where he is expected to elaborate on his outlook regarding Iran and the broader economy. Later, at 20:00, Federal Reserve official Goolsbee will address the Greater Rockford Chamber of Commerce over lunch. As the event includes a Q&A session, questions about Warsh and the latest inflation report could surface.
Currently, the probability of a 25 basis point rate hike between March and July 2027 has climbed to around 70%. On the other hand, the likelihood of a rate cut in 2026 has almost fallen to zero. In essence, hopes for another round of quantitative easing seem to have faded before they could begin—at least according to current data.
According to analysts, even if Warsh assumes his new role at the Fed this week, more aggressive rate cuts are off the table in the near term given persistent inflationary pressures.
With all eyes on key US macro reports and high-level scheduled talks, significant volatility is expected in both equity and crypto markets for the immediate future. Market participants are urged to stay cautious as uncertainty prevails.
As of now, Bitcoin’s steady price in the face of negative economic data is being closely watched as an indicator of possible shifts in investor sentiment—though experts caution against reading too much into short-term momentum given the broader market context.
