Bitcoin Holds Steady Amid Political Tensions and Stagflation Fears

The crypto markets are showing stability at the end of the week, especially Bitcoin (BTC), which has been hovering around the $85,000 mark for days. However, behind the apparent calm lie political tensions and economic uncertainties that harbor the potential for sharp swings in both directions.

US President Donald Trump is once again causing a stir with new statements about Jerome Powell, Chairman of the US Federal Reserve (Fed). According to a report in the Wall Street Journal, Trump has discussed internally dismissing Powell early. The former investment banker was appointed during Trump’s first term and received a second term under President Biden, ending in May 2026. Powell himself remains committed to his mandate and emphasizes the Fed’s independence from political influence.

Stagflation: The Sword of Damocles for the US Economy

At the same time, concerns about “stagflation,” the combination of a stagnating economy and rising prices, are growing. The latest data from the Philadelphia Fed Manufacturing Index show a reading of -26.4, the lowest level in two years. At the same time, the Prices Paid Index climbed to its highest level since July 2022. These signals fuel fears that Trump’s tariff policy could destabilize the US economy.

Nevertheless, the reaction on the markets has so far remained subdued: The S&P 500 and the Nasdaq were barely changed on Thursday, while Bitcoin and Ethereum (ETH) each rose by 0.8 percent.

Bitcoin traders bet on both scenarios

The derivatives sector presents a mixed picture: On the Deribit platform, traders are betting on call options with strike prices between $90,000 and $100,000 for Bitcoin – expiration dates in May and June indicate short-term optimism. At the same time, market participants are hedging against potential price losses for Bitcoin with put options at $80,000. The mix of long bets and hedging highlights the uncertainty in the market.

The VIX volatility index—known as Wall Street’s “fear barometer”—also remains elevated. Despite a slight slowdown, the reading remains above the 50-day moving average, indicating a persistently fragile market environment.

Conclusion

Bitcoin appears stable – for now. But political risks surrounding Powell and growing economic concerns could quickly cause movement. Investors are currently pursuing a two-pronged approach: speculative optimism and cautious hedging.

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(Featured image by Kanchanara via Unsplash)

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