As President-elect Donald Trump prepares to take office, the US Federal Reserve (Fed) warns that inflation may be harder to control than expected, which could have a significant impact on the Bitcoin market and other risk assets.
Fed Forecasts “Persistent” Inflation
In minutes from its December meeting released on Wednesday, the Fed said Trump’s trade and immigration policies could keep inflation above its 2% target, making the central bank more cautious about cutting interest rates in 2025.
Nevertheless, Bitcoin's price did not fluctuate significantly following this information. The world's largest cryptocurrency is currently trading around 93,800 USD, down more than 3% in the past 24 hours, but most of the decline occurred before the minutes were published.
Impact on Bitcoin and Risk Assets
Bitcoin and risk assets like tech stocks often benefit from low interest rates, as lower borrowing costs make it easier for investors to pour money into assets with high price volatility.
Previously, in September 2022, when the Fed cut interest rates, Bitcoin surged significantly. Notably, in December 2024, the price $BTC reached a new all-time high above 108,000 USD after Trump won the election and committed to supporting the digital asset industry.
However, if inflation is not controlled, the Fed may maintain higher interest rates, putting downward pressure on Bitcoin.
Trump – The Friend of Bitcoin?
President-elect Donald Trump builds a friendly image with Bitcoin, promising to support the digital asset industry and reduce regulations on Wall Street. However, his tariff policy, although considered narrower than the initial plan, may still create additional inflationary pressure.
In the meantime, investors are awaiting the latest job report this Friday to better assess economic prospects.
Conclusion
Under President Trump, the cryptocurrency industry may benefit from supportive policies, but pressure from inflation and the Fed's interest rate policy remain factors to watch.
⚠️ Risk warning: The cryptocurrency market is highly volatile. Exercise caution when investing and ensure you understand the risks before participating. #NFPCryptoImpact