BTC USD markets are bracing for a highly anticipated FOMC May 2025 decision from Powell, but is it the calm before the real cut?
All eyes turn to the Federal Reserve this week as the May 7 FOMC meeting approaches. Market sentiment is braced for a non-event (no change to the federal funds rate), but traders know better than to mistake silence for inaction.
With inflation sticky, Q1 GDP contracting, and Trump-era tariffs starting to filter into complex data, this decision could shape the tone for the entire second half of 2025.
Status Quo: Will Powell Hold The FOMC Rates Ceiling for Now?
The Fed’s benchmark rate is expected to remain between 4.25% and 4.5%, where it has been since last December.
This is not surprising, inflation remains above the 2% target, with March PCE core inflation clocking in at 2.6% YoY, and Powell has made it clear that data, not expectations, will drive the pivot.
But this “no move” masks the real focus, the June and July meetings, when the first cut may land.
Markets Pricing in a July Pivot, But Fed Playing It Close
Fed Fund Futures on CME show the market pricing in a near-70% chance of a rate cut by July, possibly another before year-end.
However, the Fed’s March dot plot suggests just one or two cuts at most, with the 2025 median terminal rate still at 4.0%, higher than market optimism implies.
Powell’s messaging hasn’t changed: The Fed is “assessing the total impact” of evolving Trump-era policies, especially tariff expansions, before committing to cuts.
In April, he warned, “Those policies are still evolving, and their effects on the economy remain highly uncertain.”
Translation? Expect hawkish patience.
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GDP, Jobs, Inflation: Signals Are Mixed For BTC USD Markets
The -0.3% Q1 GDP print spooked analysts, but it’s likely distorted. Q2 is projected to rebound to around 2.0%, putting real Q1-over-Q1 growth around 1.8%, well within the FOMC’s target range.
The labor market remains resilient, with unemployment at 4.2%, which is exactly on trend with FOMC projections. That strength is a double-edged sword, though, as it gives the Fed room to hold rates high, but limits justification for immediate easing.
Inflation is trickier. While elevated PCE figures persist, they remain within the Fed’s forecast range. The question is how new trade friction and supply chain dislocations from tariff policy might inject fresh price pressure into the system, potentially reaccelerating core inflation into Q3.
With BTC USD currently stabilizing around $95K—$96K following a push up to $98K, crypto markets are eyeing the FOMC outcome as a macro inflection point.
A dovish surprise, or even subtle forward guidance toward a June cut, could ignite a breakout beyond $100K. Conversely, if Powell emphasizes patience and uncertainty, expect consolidation across risk-on assets until more data lands.
The Biggest Crypto Event Of Next Week
On 7th May, the FOMC rate cut decision will be released.
The market is currently predicting 97.2% probability of no rate cut.
But the real thing will happen during the Powell press conference.
Since the last FOMC meeting, inflation has…
— Niels (@Web3Niels) May 4, 2025
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The Fed Holds: But Crypto Bulls Are Already Charging Into Bitcoin Airdrops
So, with no major shift expected from the Fed this week and Powell likely to keep playing the same cautious hand, all eyes are turning to June. Markets are already pricing in a cut as early as next month, and the pressure is building.
Any hawkish deviation could send risk assets wobbling, but the base case remains: a softening Fed, sticky inflation, and a slow but steady descent in rates through H2 2025.
Which brings us to crypto, and to Bitcoin.
The BTC USD price is already front-running the pivot narrative. It broke through $96,000 this week, up almost 30% from April lows, and institutions are back in force.
Bitcoin ETFs are seeing multi-billion dollar inflows, Q1 treasury allocations surged, and even retail sentiment is thawing after months in the cold.
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