Notably, the European Central Bank has slashed interest rate by 25 bps, bringing it down to 2.25%. For context, this marks its seventh consecutive cut since June 2024. The cumulative reduction, amounting to 1.75 basis points from a peak of 4%, represents the ECB’s most aggressive easing cycle among major central banks.
Specifically, the decision was due to concerns over the eurozone’s economic outlook, which has been negatively impacted by escalating U.S. tariffs, including a 20% levy on EU imports.
These trade tensions have introduced uncertainty, leading to weakened growth prospects and inflation falling to 2.2% in March 2025, close to the ECB’s 2% target. The ECB’s rate cuts aim to stimulate spending, borrowing, and investment amid these challenges.
Trump Urges Federal Reserve to Follow Suit
Reacting to the ECB’s latest move, President Donald Trump criticized the U.S. Federal Reserve’s comparatively cautious approach. He expressed his dissatisfaction via Truth Social, lambasting Federal Reserve Chair Jerome Powell for being too slow and often mistaken in his policy decisions.
Further, Trump stressed that while global prices such as oil and groceries are decreasing, and tariffs are benefiting the U.S. economy, the Fed still hasn’t acted decisively to support further growth.
Notably, he called for immediate rate cuts and even suggested Powell’s removal from office, indicating a growing political push for looser monetary policy in the United States.
While the ECB is racing ahead with monetary easing, the Federal Reserve has been hesitant. Since September 2024, the Fed has implemented only three rate cuts, totaling 75 basis points, placing the current federal funds rate between 4.25% and 4.50%.
Federal Reserve officials, including Powell, have signaled a wait-and-see approach. They continue to stress the importance of evaluating incoming economic data before making further decisions. This tone looks to maintain financial stability, yet it also places the Fed out of sync with more aggressive central banks like the ECB.
How Could Bitcoin React?
Significantly, these monetary policies could have meaningful implications for risk assets, particularly crypto assets like Bitcoin. The ECB’s rate cuts typically encourage investors to seek higher-yielding alternatives, driving interest in speculative assets, including Bitcoin and crypto.
In contrast, the Fed’s reluctance to cut rates could strengthen the U.S. dollar, placing downward pressure on dollar-denominated assets like Bitcoin by making them less attractive to international investors.
Bitcoin has already shown signs of reacting to these macroeconomic headwinds. After a steep correction that saw the cryptocurrency fall below the $80,000 level, it has since regained ground, currently trading around $84,052.
However, it remains in a struggle between bullish optimism and bearish pressure near the $85,000 resistance zone. The uncertainty surrounding the Fed’s next policy move is adding to this volatility, leaving Bitcoin traders cautious.
Market participants, particularly in the crypto scene, are now looking at the Federal Reserve’s next rate decision early next month, which will likely contribute to the next price direction.
Should the Fed pivot towards a more dovish stance and announce further rate cuts, Bitcoin could experience renewed buying momentum as liquidity returns. Conversely, continued restraint by the Fed could suppress investor appetite for high-risk assets, prolonging Bitcoin’s sideways or downward trajectory.
Source: The Crypto Basic / Digpu NewsTex