- President Donald Trump criticized Fed Chair Jerome Powell for not cutting interest rates and urged him to “stop playing politics.”
- Powell remarked that the Fed will adopt a “wait and see” stance as it’s premature to make any policy adjustments.
- Bitcoin’s value remained stable on Friday even as the stock market lost $1.5 trillion, indicating a slight decrease in the correlation between cryptocurrencies and stocks.
- Bitcoin could emerge as a key player in the ongoing global trade conflict if its reputation as a “safe haven” grows stronger.
Bitcoin (BTC) maintained a trading value above $84,000 on Friday, demonstrating resilience amid significant drops in the stock market. This market response follows the confrontation between U.S. President Donald Trump and Federal Reserve Chairman Jerome Powell over interest rate policies.
Bitcoin displays stability amid interest rate cut discussions
Following the implementation of reciprocal tariffs impacting international trade, President Trump took to his social media platform Truth Social to call out Jerome Powell, asserting that it’s an ideal moment for the Fed to lower interest rates. He also accused Powell of being “always late” and suggested he could use this opportunity to “change his image.” Trump reiterated that Powell must “stop playing politics” regarding the decision on interest rates.
The President’s social media post appeared just moments before Powell addressed the Society for Advancing Business Editing and Writing Annual Conference in Virginia.
During his address, Powell indicated that the Fed would keep evaluating economic data and assessing potential risks before altering any policies. He emphasized that the central bank is in a robust position to hold off on changes until there is more clarity regarding the economic forecast.
The Fed’s choice to maintain a “wait and see” policy on rate cuts fueled further losses in the financial markets. U.S. stocks faced intensified declines, with the S&P 500 and Nasdaq 100 falling by 5.9% and 6%, respectively.
Precious metals also showed negative reactions, as Gold dropped 2.6% and Silver fell more than 8% during the day.
Conversely, Bitcoin and other cryptocurrencies remained stable despite the widespread market upheaval. Bitcoin temporarily regained the $84,000 threshold, while XRP and Solana posted increases of 3% and 5%, respectively.
Bitcoin’s safe haven narrative gains traction as it diverges from stock trends
The cryptocurrency market’s strong performance amid a stock market downturn may suggest a weakening relationship between crypto and traditional equities. This shift also indicates a growing preference for cryptocurrency investments, as Trump’s tariffs could lead to a protracted global trade war.
The crypto market’s response aligns with Bitcoin’s reputation as a safe haven during periods of profound market volatility, which may attract investors if stocks and Gold continue to decline.
A comparable situation occurred during the 2020 COVID-19 pandemic, when Bitcoin began the year at about $7,161. The pandemic initially caused a crash across both cryptocurrencies and stocks, leading Bitcoin to drop to a low of $4,900 in March.
However, Bitcoin began to decouple from stock trends shortly thereafter, rising rapidly in the following months while traditional stocks remained under pressure from the pandemic.
SPX vs BTC 2020 weekly chart
The market may be poised for a similar shift since Bitcoin showed declines alongside stocks over the past two months, reminiscent of events during the 2020 pandemic when Trump suggested tariffs in February. Currently, Bitcoin is starting to show resilience, gaining over 2% positioned against the backdrop of the S&P 500 losing more than $1.5 trillion on Friday. This points to a slight separation from equities, similar to what happened in mid-March 2020.
If Bitcoin continues to maintain its position in the upcoming weeks, its safe-haven narrative could gain momentum, potentially enhancing its attractiveness as Trump’s tariff situation impacts financial markets.
Nonetheless, a drop below the $80,000 support level would invalidate this theory and could trigger substantial sell-offs for the leading cryptocurrency.