On Wednesday, Bitcoin fell below a key support level, leading to a swift decline in its value. This drop coincides with Federal Reserve Chair Jerome Powell’s ongoing “wait and see” strategy regarding potential cuts to interest rates.
Recently, Bitcoin’s performance has shown a growing correlation with interest rates and broader economic indicators, similar to trends observed in the stock market. Rising tensions between Powell and President Trump have compounded this volatility, contributing to a decline in Bitcoin and other cryptocurrencies.
The leading cryptocurrency dropped below $106,000 on Wednesday, marking a 2.47% decrease over the past two days. After a significant rally of 7.32% last week, which saw Bitcoin close above $108,000, the cryptocurrency has struggled, with its price receding further since Monday. As of the latest figures, Bitcoin was trading around $106,998.
James Toledano, COO at Unity Wallet, commented on the market dynamics, stating, “Rate cut expectations, political tensions, and a declining apparent demand signal some short-term caution.” Nevertheless, he remains hopeful that the markets will gain momentum as the third quarter approaches.
Crypto Markets Dip Following Powell Comments
During remarks on Tuesday, Powell addressed Trump’s push for immediate interest rate reductions, emphasizing that the Fed’s decisions will rely on evolving data. He refrained from providing a specific timeline for any potential rate cuts.
Recent interactions between Trump and Powell have become contentious, with blame being exchanged over the state of the economy. On Monday, Trump sent a handwritten note to Powell, criticizing him for the current economic challenges facing the United States.
“If they were doing their job properly, our Country would be saving Trillions of Dollars in Interest Cost,” Trump’s note maintained. Additionally, Trump has suggested that Powell should resign before the end of his term in May.
“No inflation, our country’s strong, our interest rates should be 3 points lower…you’ve got a moron at the head of the Fed. He’s a moron!” – @POTUS blasts Jerome Powell as he speaks to the press on Air Force One! pic.twitter.com/wPURpZBdNj
— Real America’s Voice (RAV) (@RealAmVoice) July 1, 2025
When pressed about Trump’s pressuring, Powell reiterated his focus on fulfilling his responsibilities. He pointed out that interest rates might have already decreased if it were not for the president’s tariff policies.
Following these comments from Powell, Bitcoin experienced a 1.3% decline, trading at $105,859 on Tuesday.
Toledano remarked, “President Trump is yet again voicing his intent to remove Fed Chair Jerome Powell, and this, more than any other macroeconomic factor, has the ability to cause more short-term financial havoc.” He noted that while such pressures may lead to short-term fluctuations, the long-term trajectory of Bitcoin remains driven by fundamental factors. “Bitcoin is only going one way as far as the arc of history is concerned.”
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