Key Points:

• As global markets react to rising U.S.-China trade tensions and political pressure on the Federal Reserve, Bitcoin remains active around the $85,000 mark.

• Trump’s criticism of Powell could lead to leadership changes, potentially accelerating rate cuts and boosting demand for Bitcoin.

• Diverging policies between the U.S. and the European Central Bank (ECB) may affect the strength of the dollar, impacting Bitcoin’s short-term price trend.

  
  

Bitcoin Price Outlook Clouded by Political Tensions as Traders Weigh Fed Independence and Interest Rate Direction

Bitcoin continues to hover above $85,000 as former President Donald Trump increases pressure on Federal Reserve Chair Jerome Powell.

Despite growing pessimism over the U.S.-China trade war and a broadly bearish global financial market, Bitcoin showed resilience near the $85,000 level on Thursday amid escalating political friction between the White House and the Fed.

Trump intensified his criticism of Fed Chair Jerome Powell, hinting at possible removal after Powell reaffirmed the Fed’s legal independence during a speech at the Economic Club of Chicago. Powell emphasized that the central bank’s autonomy is legally protected, stating: “ We’re not removable except for cause.”

Source：Truth Social

These comments came after Trump posted a series of messages on his Truth Social account, calling Powell’s policy direction “a mess” and accusing the Fed of missing a timely opportunity to cut rates amid falling inflation and commodity prices. He pointed out that the European Central Bank is expected to enact its seventh rate cut, urging the Fed to act immediately.

Trump claimed inflation is under control and called for rate cuts to support economic growth. Reports also suggest Treasury Secretary Scott Bessent is preparing to begin interviewing potential successors to Powell later this year — a move that adds further uncertainty to the Fed’s policy outlook.

How Is Bitcoin Reacting to Trump’s Criticism of Powell?

Interest rates play a crucial role in capital flows into risk assets like Bitcoin. Lower interest rates typically encourage investors to seek higher returns in alternative markets, including crypto. Any shift in Fed policy direction could therefore be a major catalyst for Bitcoin’s price action.

Source：CoinGecko

If Trump successfully pressures the Fed into an early rate cut, it could reignite bullish momentum across Bitcoin and the broader crypto market.

Lower borrowing costs and increased liquidity might prompt both institutional and retail investors to allocate more capital into digital assets, potentially pushing Bitcoin past the $90,000 milestone. Such a move would align with the broader global trend toward monetary easing — particularly if the ECB continues cutting rates.

On the other hand, if the ECB cuts rates while Powell opts to pause again, this divergence could create a temporary imbalance in capital flows. That might strengthen the U.S. dollar in the short term, putting downward pressure on Bitcoin and other dollar-denominated assets.

In this scenario, Bitcoin could face renewed volatility and range-bound trading if macroeconomic uncertainty continues around interest rates and inflation targets.

Bitcoin Price Forecast: Facing Downside Risk Below $88,500 Resistance

Bitcoin’s price forecast now points to downside risk, as the asset consolidates below the $88,454 resistance level — the upper boundary defined by the Donchian Channel — signaling a loss of initial bullish momentum.

Although the price remains above the channel’s midpoint at $81,456, recent bearish signals suggest weakening bullish strength. The narrowing channel range between $88,454 and $74,458 typically precedes a breakout or breakdown.

Source：TradingView

The MACD histogram also indicates a reduction in bullish momentum. While the MACD line is still above the signal line, it has started to flatten near 551, suggesting stagnation rather than strengthening momentum.

If Bitcoin falls below the $81,456 support, it could test the lower boundary at $74,458, with further downside to $71,000 possible if selling pressure intensifies.

However, a confirmed daily close above $88,454, accompanied by strong MACD expansion, could revive the bullish trend and set a short-term target of $92,000. Until then, momentum appears to be stalling, and the trend remains tilted to the downside under resistance pressure.

Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.