Bitcoin Price Takes a Hit Following Jerome Powell’s Hawkish Remarks

The market ran into turbulence following a press conference from U.S. Federal Reserve Chair Jerome Powell. 

This time, Powell pointed to two major risks: 

• A potential surge in inflation fueled by new tariffs
• A slowdown in economic growth

As a result, investors quickly adjusted their expectations around a potential rate cut. That shift triggered a pullback across risk assets and a surge in volatility that rippled through the crypto markets.

Related: Will There Be a Recession in 2025? Markets, Data, and Trump’s Tariffs

Inflation Warning  

During his speech at the Economic Club of Chicago on April 16, Jerome Powell noted that the current level of tariffs is much higher than expected, and the economic fallout could be just as steep.

Additionally, he outlined a domino effect that rising import costs might trigger:

1. A surge in goods flowing in ahead of new restrictions. 
2. A slowdown in GDP growth.
3. Added pressure on consumer prices.  

The Fed Chair reminded markets of the central bank’s dual mandate (price stability and maximum employment) and warned that these two goals could clash in the face of external shocks. He added that it’s likely too soon to consider any shift in monetary policy while the full impact of ongoing trade tensions remains uncertain.

Read more: Trump Administration to Launch Fed Chair Search in Fall 2025

Crypto Market Reaction  

Shortly after Powell’s remarks, Bitcoin dropped by around 2.5%, sliding from $85,500 to $83,300. However, the dip was short-lived, as the price began to recover.

The bigger question looming over Fed policy now is whether Donald Trump could sway the regulator’s future decisions.

The stock market also faced a sharp pullback:

• The S&P 500 ended the session with a loss of more than 2%
• The NASDAQ dropped by over 3%

Related: Bitcoin Tests $83K After Breaking Below $85K—Key Support Still Intact

Analyst Takeaways

Meanwhile, concerns are rising over a potential return to 1970s-style stagflation, when inflation surges while economic growth slows. According to analysts, mounting trade barriers are creating an unusual tension between fighting inflation and supporting employment. 

Quinn Thompson, Chief Investment Officer at Lekker Capital, wrote:

Powell was incredibly hawkish. So much so he went out of his way to warn of elevated structural risks for the United States making it a less attractive jurisdiction for investment. He also downplayed the recent market volatility as “orderly functioning as expected”. Mega hawk.

Gareth Ryan, managing director at IUR Capital, cautioned that without meaningful progress in trade talks with key U.S. partners over the next 90 days, risk assets could come under renewed pressure this summer. As a result, the crypto markets may experience another round of corrections.

Looking Ahead

All eyes now turn to upcoming CPI data and public remarks from Fed officials, as even subtle shifts in tone could trigger sharp moves and renewed turbulence in the crypto market.  

As of press time, CME FedWatch shows an 86.5% probability that the Fed will hold rates steady in May. Still, those odds remain fluid, reflecting the market’s evolving conditions.

Read more: Will the Fed Cut Rates in May? Falling Inflation Meets Rising Market Tensions

As markets await fresh updates on trade policy and monetary direction, analysts are urging investors to prepare for increased volatility and adjust their risk management strategies in advance, accounting for potential worst-case scenarios.