Fed policy, inflation data, and rising geopolitical risks may drive BTC volatility this weekKey Takeaways:Fed Chair Jerome Powell will testify before Congress this week amid mounting political pressure to cut rates.Core PCE inflation data, due Friday, is expected to show subdued price growth, reinforcing rate-cut bets.Trump’s tariff pause expires July 9, potentially reintroducing inflation risk and impacting Fed policy.Bitcoin has remained resilient above $100,000 despite Iran tensions and global macro uncertainty.Markets Brace for Fed Signals as Powell Heads to Capitol HillBitcoin opens the week above $101,000 as traders focus on macro headwinds that could shape global risk sentiment. The top event: Federal Reserve Chairman Jerome Powell’s semi-annual testimony to Congress, where he will likely defend the Fed’s independence and delay in rate cuts.With inflation cooling and labor market cracks appearing, some Fed officials — including Trump appointee Christopher Waller — have hinted at a possible rate cut in July. This has raised expectations of a dovish shift in Powell’s tone.“Early cracks in labor and weak housing activity support the case for a July pivot,” said Chris Weston, head of research at Pepperstone. “Markets are already pricing in two cuts this year, with September in focus.”Powell’s testimony comes as political pressure mounts from President Trump, who continues to blame the Fed for high borrowing costs, saying Powell is “costing the country hundreds of billions.”Friday’s Core PCE Release Will Be KeyThe core personal consumption expenditures (PCE) price index — the Fed’s preferred inflation gauge — is due Friday. Consensus forecasts a 0.1% month-on-month rise in May, pushing the annualized core PCE to 2.6% and the three-month annualized rate to 1.6%, a dovish signal.Still, there’s a catch. Tariffs set to take effect in July could reverse the easing trend. ING warns that the full inflationary impact of Trump’s “Liberation Day” tariffs won’t appear until Q3, potentially delaying deeper cuts.“Whether tariffs cause a temporary shock or persistent inflation won’t be clear before December,” ING analysts said. “That makes one 2025 rate cut more likely, unless jobs data weakens further — in which case we could see a 50 bps cut.”Trump Tariff Deadline LoomsTrump’s 90-day pause on reciprocal tariffs ends July 9. New tariffs — unless deferred — will go into effect, increasing price pressures just as inflation appears to cool.So far, the U.K. and China have agreed to partial deals, but the European Union has not responded, adding more uncertainty around global trade and its inflationary implications.Geopolitical Risks: Iran and Oil MarketsMiddle East tensions remain elevated following U.S. airstrikes on Iran’s nuclear sites, but oil prices have stayed stable — for now. Analysts warn that Iran could disrupt oil markets without full-scale conflict.“Iran doesn’t need to close the Strait of Hormuz — just threatening it raises shipping insurance costs,” Weston said.The cost to insure vessels through the vital oil corridor has jumped from $0.20 to $0.80 per barrel, according to Xclusiv Shipbrokers, increasing pressure on global oil supply chains.Outlook for BitcoinDespite macro and geopolitical headwinds, Bitcoin has remained above $100,000, with some traders eyeing renewed bullish momentum if the Fed hints at dovish policy.Order book data from CoinGlass suggests BTC may be ripe for a short squeeze, especially if dovish tones emerge from Powell or Friday’s PCE print confirms disinflation.“Order books are skewed toward bids — traders are positioned for downside, making BTC vulnerable to a squeeze,” said analyst Skew.Bitcoin is showing resilience as both a risk asset and a hedge, with Powell’s testimony and Friday’s inflation data likely to set the tone for the week ahead.
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