Fed Chairman's speech cools interest rate cut expectations: Bitcoin falls in response, is the market outlook uncertain?

Federal Reserve (FED) Chairman Jerome Powell recently warned that there remains a high degree of uncertainty in the inflation path, suggesting that further interest rate cuts this year are not a foregone conclusion. His remarks led to a fall in the price of BTC, dropping from the day's high. Powell's speech highlighted the dual risks faced by the Federal Reserve (FED) between inflation and the labor market, breaking the market's optimistic expectations for interest rate cuts at the October and December FOMC meetings, indicating that the crypto market may face sustained downward pressure.

The Federal Reserve (FED) Chairman: There is no predetermined path for monetary coin policy

At the 2025 Economic Outlook Luncheon of the Providence Chamber of Commerce in Rhode Island, Federal Reserve (FED) Chairman Jerome Powell made it clear that the Federal Reserve (FED) has no preset path for its coin policy. They will determine the appropriate policy stance based on the latest data, evolving economic outlook, and risk balance. He admitted that the near-term risks of inflation are rising, while the downside risks to employment are also increasing, putting them in a challenging position. He pointed out that this two-way risk means there is no 'risk-free path.' Powell warned that if rate cuts are too aggressive, it could exacerbate inflation risks, and future reverse operations may be needed to achieve the 2% inflation target. Conversely, if restrictive policies are maintained for too long, the labor market may unnecessarily weaken. Facing this dual risk, Powell stated that the Federal Reserve (FED) framework requires them to balance the dual mandate. He reiterated that last week's FOMC meeting's first rate cut was driven by considerations of downside risks to the labor market, stating that this policy stance puts them in a good position to address potential economic developments.

BTC price under pressure: market sentiment shifts

Due to the impact of Jerome Powell's speech on cooling and interest rate expectations, the price of BTC has significantly fallen. According to TradingView's data, the leading encryption coin is currently trading at about $112,700, lower than the intraday high of $113,300. As previously reported by CoinGape, the data of BTC and Ethereum ETFs had already indicated market selling sentiment before the speech of the Federal Reserve (FED) chairman. With the weakening of interest rate expectations, BTC and the broader encryption market are facing the risk of continued weekend falls.

Concerns about Inflation: Tariff Factors and Internal Divisions

Jerome Powell emphasized that the uncertainty of the inflation path remains high, and they need to carefully assess and manage the higher and more persistent inflation risks. He also specifically mentioned the impact of tariffs on inflation, predicting that the price increase caused by tariffs may not all appear at once, but will gradually transmit to the supply chain in the next few quarters, thereby pushing up inflation during this period. There are also differences within the Federal Reserve (Fed) on views regarding inflation and interest rate cuts. Atlanta Fed President Raphael Bostic and Director Alberto Musalem both expressed concerns about rising inflation, with Bostic not supporting further interest rate cuts this year. Meanwhile, Directors Michelle Bowman and Stephen Miran believe that the primary task is to address the weak labor market and support more rate cuts this year. It is worth noting that Miran was the only FOMC member last week who supported a 50 basis point rate cut.

Conclusion

Jerome Powell's cautious remarks have poured cold water on the previously optimistic rate cut expectations, also reminding the market once again that the policy direction of the Federal Reserve (Fed) highly depends on data. BTC has shown vulnerability in the face of macroeconomic uncertainty, with its price fluctuations closely related to the policy signals of the Federal Reserve (Fed). Investors need to closely monitor future economic data and statements from Federal Reserve (Fed) officials to cope with possible market fluctuations.

Disclaimer: This article is for news information purposes and does not constitute any investment advice. The crypto market is volatile, investors should make decisions cautiously.