What to know:
- Bitcoin stabilized around $85,000, while the CoinDesk 20 Index was led higher by gains in BCH, NEAR and AAVE.
- President Trump reportedly has been privately discussing firing Powell, raising concerns about market stability and central bank independence.
- Bitcoin options traders are chasing bullish, $90k to $100k bets, while seeking protection from a potential decline in the near term, Deribit data shows.
Bitcoin (BTC) hovered slightly below $85,000 during the late hours of Thursday, with investors facing an additional dose of uncertainty due to escalating tensions between U.S. President Donald Trump and the Chairman of the Federal Reserve, Jerome Powell.
On Wednesday, markets experienced a decline due to Powell’s assertive comments, in which he criticized Trump’s tariff policies and predicted they might lead to an economic slowdown and increasing inflation – a condition economists refer to as “stagflation.” Powell emphasized his primary concern for the moment is price stability, hinting at a more stringent Federal Reserve policy than previously anticipated.
During his first term, Trump appointed Powell as Federal Reserve chair (Powell was subsequently given a second four-year term by President Biden). Since returning to the White House, Trump has voiced his dissatisfaction with Powell. However, Powell, who is scheduled to lead the central bank until May 2026, has consistently asserted his intention to serve out his term and hinted that the president lacks the authority to dismiss him.
On Thursday, it was reported by the Wall Street Journal that Trump has been contemplating dismissing Chair Powell for several months, based on information from people involved in the situation. It seems that former Federal Governor Kevin Warsh is prepared as a potential successor to Powell, but Warsh has urged the president not to take action against the current Fed chair, according to the article.
As a financial analyst, I concur with Warsh’s cautionary stance. Similarly, Treasury Secretary Scott Bessent has voiced his concern, stating that such a move could potentially stir up turbulence in our already volatile U.S. markets. It is crucial to remember that the central bank should ideally maintain its independence from political interference to ensure market stability and economic prosperity.
The probability of Trump dismissing Powell this year, as predicted on the cryptocurrency forecast platform Polymarket, reached a record high of 19%. This is the highest level since the contract was first introduced in late January.
Trump’s remarks followed the European Central Bank (ECB) reducing its main interest rates for the seventh time in a row on Thursday, expressing concern about worsening economic growth prospects.
As a researcher, I observed a significant impact on markets this week, primarily due to the publication of the latest Philadelphia Fed Manufacturing Index early Thursday morning. This index indicated a sharp decline in activity this month, reaching its lowest point (-26.4) in the past two years.
Concurrently, the prices paid index attained its highest reading since last July, further fueling apprehensions about the potential consequences of the Trump administration’s extensive tariff policy. This heightened concern stems from the possibility that such a policy could steer the U.S. economy towards stagflation.
The S&P 500 and tech-heavy Nasdaq stock indexes traded mostly flat during the day.
Over the last 24 hours, a review of the cryptocurrency market indicated that Bitcoin (BTC) and Ethereum (ETH) both experienced a 0.8% increase. The majority of assets within the CoinDesk 24 Index saw upward trends throughout the day, with bitcoin cash (BCH), NEAR, and AAVE recording the highest gains.
How bitcoin traders position amid heightened fear on Wall Street ?
The price of Bitcoin has settled around the range of $83,000 to $86,000. Traders are actively pursuing optimistic wagers, but at the same time, they’re also maintaining a watchful eye for potential drops in value.
On Deribit, there’s been a noticeable surge of traders buying call options with strike prices ranging from 90k to 100k, which expire in May and June. This is according to a statement made by the exchange in their market update on Thursday. The increased interest in these call options suggests that many traders anticipate further price increases.
Some of these bullish bets have been funded by premiums collected by selling put options.
Currently, there’s growing enthusiasm among investors for acquiring put options with an expiration date this month, priced around $80,000. This action suggests anticipation of possible price drops. Purchasing a put option can be likened to buying insurance that offers protection against potential price falls.
Even though there’s been a retreat from record highs, the two-way traffic – as indicated by the VIX, a measure of Wall Street’s fear level based on 30-day implied volatility – remains significantly higher than its moving average over the past 50 days.
On X, it was stated that the VIX indicates that the larger economic scenario remains uncertain, not improving.
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2025-04-18 00:56