After the US Federal Reserve Jerome Powell stepped down and Kevin Warsh became the new Fed Chair, markets have expected a broader macro volatility which already had shaken the market long before that. Specially the October crash, which sent BTC down 30%, triggered a strong risk-off mood across crypto, with the current geopolitical uncertainty only adding another layer of pressure.
Although in the latest development, BTC rallied to $77k after the U.S President said he would soon announce a deal with Iran, highlighting how closely BTC continues to react to macro headlines. In a recent interview, the Fed Chair signaled openness toward rate cuts, marking a notable shift in narrative for the crypto market, which until now had largely been pricing in the possibility of further rate hikes.
From a macro standpoint, though, rate cuts still look difficult to justify. Oil prices have surged following the war, while inflation across global markets remains at multi year highs. This could weaken demand relative to supply, pointing toward a more deflationary setup. In this context, rate cuts are being viewed as a natural policy response.
Moreover, onchain data isn’t reflecting the same stance yet. The Fed Chair’s rate cut argument is based on AI driven productivity, which could increase supply relative to demand and ease inflation over time by improving efficiency and output. However, if that productivity upside doesn’t materialize in real economic data or corporate earnings, the policy assumption weakens.
As of now, at the time of writing this article, BTC is being struggling to maintain the support level at $78,600 and is being trade around $77,300 and stands at a market capitalization of $1.55 Trillion.