Bitcoin rebounds to $84,000, but…

14 April 2025

Bitcoin rebounds to $84,000 on Fed Rate cut expectations, but macro risks still loom

Written by Linh Tran, Market Analyst at XS.com

Bitcoin (BTC) has reclaimed the $84,000 level after a strong rebound from the recent low near $74,500, supported by growing optimism that the Federal Reserve (Fed) may begin its interest rate cutting cycle later this year.

The main catalyst for this rally stems from the March PPI and CPI data, which showed clear signs of easing inflationary pressure in the U.S. The Consumer Price Index (CPI) came in at 2.4%, lower than both expectations and the previous month’s figure. Following that, the Producer Price Index (PPI), released last Friday, posted a surprising -0.4% decline, in sharp contrast to the +0.2% increase forecast by analysts.

These developments have strengthened expectations that the Fed may conduct at least two rate cuts in 2025, with the first possibly occurring as early as September. This is a key factor in reducing capital costs and boosting investor sentiment toward risk assets such as equities and cryptocurrencies.

The U.S. stock market has also provided significant support to Bitcoin’s recovery. Both the S&P 500 and Nasdaq surged late last week, reflecting an improvement in risk appetite. Notably, BTC is once again showing a positive correlation with major equity indices, signaling the return of speculative flows to growth-oriented assets.

However, investors should remain mindful of emerging risks, particularly in the areas of trade policy and geopolitics. The U.S. government is expected to introduce new tariffs on the semiconductor industry within the next two months, aiming to reduce reliance on Chinese technology and boost domestic chip production. While the long-term goal is to protect strategic interests, in the short term, inconsistent signals from trade policy may weigh on U.S. equities and pose a risk to Bitcoin’s current recovery.

On the geopolitical front, tensions between Russia and Ukraine continue to be a major wild card. Should there be any positive signals toward diplomacy or de-escalation, market sentiment could improve, supporting BTC. Conversely, prolonged or escalated conflict could trigger renewed selling pressure on BTC, given its sensitivity to risk-off conditions.

Lastly, institutional capital has yet to return in a meaningful way. U.S.-based spot Bitcoin ETFs have recorded six consecutive sessions of net outflows, indicating ongoing caution among large investors amid persistent market instability. This remains a significant headwind for BTC’s sustained upside momentum in the short term.

 

Zaid Barem / ymm