On Tuesday (July 16), Bitcoin surged above $64,800, a staggering one-day gain of more than $5,000. Republican presidential candidate Donald Trump's chances of winning the November election remain above 70% after the shooting, and he announced that he would choose cryptocurrency-friendly JD Vance as his running mate. Federal Reserve Chairman Powell paved the way for a recent rate cut, emphasizing that second-quarter economic data gave policymakers more confidence that inflation was falling to the 2% target.

Trump: Choose crypto-friendly Vance as running mate

Trump said in a Truth Social announcement that J.D. Vance would join his campaign as the Republican vice presidential candidate. Coinbase’s Stand With Crypto initiative named Vance a “strong” supporter of cryptocurrency, citing his positive social media posts and votes for pro-crypto legislation.

In his financial disclosure report submitted to the U.S. Senate in 2022, Vance reported holding between $100,001 and $250,000 worth of Bitcoin. He also voted in favor of a joint resolution to overturn the SEC's rules requiring banks to list cryptocurrencies as liabilities on their balance sheets, legislation vetoed by President Biden.

Vance, the author of the book "Hillbilly Elegy," has been in politics for less than two years and won a Senate seat in Ohio in 2022. Trump endorsed Vance in the 2022 Senate midterm elections, and Vance supported Trump for president in the 2024 Republican primary. However, Vance previously said that Trump was "unfit" to be the president of the United States, that he "never liked him," and that anyone who voted for him was an "idiot."

Vance joins the Republican field as cryptocurrency and blockchain emerge as a watershed in the 2024 race, with convention delegates expected to nominate Trump, who announced ahead of the convention that his campaign would accept cryptocurrency donations. He may also help guide changes to the Republican Party's official platform, including statements defending bitcoin miners and opposing central bank digital currencies.

Democratic presidential candidate Joe Biden has reportedly been investigating accepting campaign donations in the form of cryptocurrencies, with one of Biden’s top advisers participating in a roundtable with cryptocurrency industry advocates in a personal capacity on July 10.

Powell's dovish signal: paving the way for a near-term rate cut

Powell highlighted three recent inflation data points, but made clear he had no intention of delivering any specific message on the timing of a rate cut. He also solidified a shift in tone that emphasizes potential risks in the labor market while the Fed continues to focus on keeping prices in check.

“We didn’t gain any additional confidence in the first quarter, but the three numbers in the second quarter, including last week, did provide some confidence,” Powell said Monday at the Economic Club of Washington, D.C.

“Now that inflation has come down and the labor market has really cooled, we’re going to look at both of those tasks simultaneously,” Powell said. “They’re much better balanced.”

The Fed has kept borrowing costs at their highest in more than two decades for about a year as it seeks to bring inflation down to its 2% target. Fed officials aim to slow price growth further without inflicting undue damage to the labor market, which has held up well so far amid high borrowing costs.

However, the unemployment rate has gradually risen recently and is now at its highest level since 2021, along with other signs of labor market weakness. These trends, combined with improving inflation data, strengthen the case for the Federal Reserve to soon begin lowering its key policy rate.

Powell said the labor market is "no longer overheated" compared to the early stages of the recovery from the COVID-19 pandemic, and suggested "unexpected weakness" could be a reason for the Fed's response.

The Federal Open Market Committee (FOMC) will hold its next meeting on July 30-31, at which the Fed is expected to keep interest rates unchanged. Traders are betting the Fed will cut rates at least twice by the end of 2024, starting in September.

“My sense is we really have to get an adverse reading to stop them from cutting rates by a quarter point in September,” said Kathy Bostjancic, chief economist at Nationwide Mutual Insurance Co. “They want to really get a handle on inflation, but there’s a growing recognition that if they overdo it, they could risk a recession.”

The Fed has a dual mandate to foster price stability and promote maximum employment, but a surge in price pressures in 2021 has shifted policymakers' focus toward fighting inflation. That message has shifted in recent weeks, with some officials, including Powell, emphasizing that concerns about rising inflation and unemployment are now more balanced.

“We want to get this done,” Powell said Monday.

He reiterated comments Powell made last week when he testified before Congress, when he said inflation was not the only risk facing the economy.

After stagnating in early 2024, inflation has resumed its downward trend toward the Fed's target. The consumer price index (CPI) generally cooled in June, with overall prices falling month-on-month for the first time since 2020.

After the data was released, San Francisco Fed President Mary Daly said some adjustments to interest rates may be necessary. Daly has previously warned that the labor market is approaching an inflection point and that a further slowdown could lead to higher unemployment. Chicago Fed President Austan Goolsbee said last week that recent inflation data showed that inflation is on track to reach 2%.

Asked about the market’s potential reaction to an assassination attempt on former President Donald Trump at a rally in Pennsylvania on Saturday, Powell condemned the violence and said he was thankful Trump’s injuries were not more serious.

Powell also weighed in on Monday on the so-called neutral rate, a concept that describes the Fed's policy stance of neither promoting nor restricting economic growth, and said that rate is likely to be higher than during the 2008-2009 financial crisis and the pandemic.

“The neutral rate, in my view, is probably higher than it was during the crisis, so interest rates will be higher,” Powell said.

He noted that the current policy feels restrictive, but not severely restrictive.

He also reiterated the Fed's commitment to avoiding political considerations when setting policy when asked about the central bank's independence. Powell said when asked that he intends to complete his term as Fed chairman, which ends in 2026, but declined to say whether he would continue in office if re-elected.

Bitcoin Technical Analysis

CoinTelegraph noted that Bitcoin’s jump above the 20-day EMA at $59,522 indicated that bearish momentum was waning.

The bulls will try to consolidate their position by pushing the price above the overhead resistance of $64,602.

If successful, bitcoin is likely to gain momentum and reach the $72,000–$73,777 resistance zone.

Conversely, if the price turns down from $64,602, it will suggest that the bears are selling on rallies. The pair could then correct back to the 20-day EMA. If the price turns up from the 20 EMA, it will suggest a shift in sentiment from selling on rallies to buying on dips, which will improve the prospects of a sustained break above $64,602.