This week, Jay Powell controls where Bitcoin and the stock markets are headed

Late last year, the Federal Reserve ruined a planned Christmas rally for both Bitcoin and the stock markets when they (as expected) announced they would cut long-term interest rates by a quarter but warned (and that was a surprise) that they would only do so twice in 2025 (investors were counting on four or even six rate cuts).

This week, Powell gets to try again, but with the markets and Bitcoin on a knife’s edge. The global markets are in correction mode and Bitcoin is already trading 30% lower than the ATH of last December. Will Jay Powell crash the markets and Bitcoin with his comments?

Euforie

Normally, US President Donald Trump can’t fire the Fed chairman, but at this point, it seems like anything is possible. Jay Powell better watch what he says after the Federal Reserve meeting later this week, because Trump doesn’t like it when the stock market goes down. Even though the late-night show hosts and liberal newspapers (the New York Times and the Washington Post) accuse Trump of talking the stock market down, you can bet that the US President will quickly blame Powell if the stock market (and Bitcoin) continues to go down after Wednesday.

“Investor sentiment was euphoric after the election but there’s been a whole lot of cold water thrown on that euphoria over the past month,” explained Jim Tierney, head of the concentrated US growth fund at AllianceBernstein.

“Powell is saying everything is fine, but that’s not what consumer sentiment is saying and it’s not where we’ve heard business sentiment to be, either.”

Support

Bitcoin has been trading in a fairly wide trading band between $77k (support) and $99k (top) for a month now. If Powell announces that the Federal Reserve expects the economy to slow down, it seems likely that the strong support line around $70-75k will be retested for Bitcoin later this week. Good news from Powell (or a quick peace deal for Ukraine and Russia) could provide a boost for the largest cryptocurrency.