Jerome Powell's Federal Reserve International Finance (IF) Department commemorative speech quietly suggested openness to monetary policy easing. This potential change drove Bitcoin (BTC) to surge above $105,000.
Meanwhile, the Federal Reserve continues to work against political pressure from President Trump advocating for rate cuts. This conflict has sparked speculation about Powell's imminent resignation.
Bitcoin Surge... IF Model Suggests Dollar Weakness
Bitcoin rose on Monday, breaking through $105,000, buoyed by expectations that the Fed will shift monetary policy by year-end.
This rally occurred following Fed Chair Jerome Powell's remarks at the 75th anniversary celebration of the International Finance department. Powell reaffirmed the importance of global data and modeling in shaping US monetary policy.
However, he did not directly mention interest rate changes. While Powell's speech was composed of praise for the IF department's legacy, analysts and crypto investors interpreted his words as policy signals amid signs of disinflation and economic recovery.
"Understanding this complex and interconnected web is essential for predicting employment and inflation paths." – Jerome Powell, Fed Chair stated.
Although Powell did not mention easing or rate cuts, he emphasized that IF research is the "center of risk and uncertainty assessments received by FOMC committee participants before each meeting".
This phrasing and Powell's mention that the department's work is "certainly relevant today" sparked speculation that the Fed might be preparing a dovish turn if current economic trends continue.
Fed Global Lens Aligns with Market Tailwinds
The latest Consumer Price Index (CPI) data showed inflation cooled to 2.3% year-over-year, approaching the Fed's 2% target. Simultaneously, the US unemployment rate remains stable at around 4.2%, suggesting a robust labor market.
This combination of disinflation and employment stability supports both of the Fed's dual objectives. Crypto market analyst Kyle Chasse noted that these dynamics fuel risk assets like Bitcoin.
"Is a Fed pivot approaching? The last CPI was just 2.3% year-over-year. Unemployment is stable around 4.2%. Fed officials suggest rate cuts are possible by year-end if inflation continues to cool and employment remains strong. This is rocket fuel for Bitcoin." – Kyle Chasse posted.
Investors also noted Powell's praise for the IF department's development of advanced models for "assessing risks and uncertainties through alternative scenarios", which he described as essential for understanding global shock impacts.
While not directly linked to specific predictions, these capabilities are increasingly perceived by market participants as laying the groundwork for responsive monetary policy in H2 2025.
Bitcoin Recovery: Betting on Policy Change?
Bitcoin's breakthrough above $105,000 reflects broader optimism that the Fed might begin easing before year-end, especially if inflation continues to decline.
According to CME FedWatch Tool data, the market prices a 95.3% probability that the Fed will maintain its current target rate of 4.25-4.50 basis points at the June 18, 2025 FOMC meeting. Meanwhile, there's a 4.7% chance of a 25 bps cut to 40.0-4.25 bps.
While the central bank continues to use cautious language, Powell's focus on global risk modeling and ongoing uncertainty recognition suggests a more data-sensitive stance.
"This work is crucial to understanding the quantitative implications of uncertainty shocks. It is certainly relevant today." – Jerome Powell, Fed Chair
For Bitcoin bulls, this relevance could translate into an environment of easing financial conditions, dollar weakness, and investors seeking alternative stores of value.
While the Fed has not confirmed a pivot, the market is listening carefully, and Bitcoin maintains levels above $105,000.
According to BeInCrypto data, BTC is currently trading at $105,568, up 0.62% in the past 24 hours.
As Kyle Chasse suggested, rate cuts could stimulate Bitcoin's growth. However, with a high likelihood of no change, significant upward momentum might be delayed in the short term, which could explain the modest rise.
