Fed to the Rescue? Bitcoin Could Recover by May as Liquidity Eases, Analysts Say
Bitcoin, navigating a $2.85 trillion crypto market, faces turbulence. According to Charles Edwards of Capriole Investments, President Donald Trump announced global reciprocal trade tariffs, triggering an 8.5% single-day drop in Bitcoins price.
Yet, amid this uncertainty, analysts see a potential lifeline. The Federal Reserves shift toward easing liquidity could spark Bitcoins recovery as early as May 2025. This feature examines the data and expert insights driving this outlook.
Tariffs Trigger Bitcoin Price Decline
Trumps tariffs, announced on April 2, 2025, hit Bitcoin hard. The cryptocurrency dropped 8.5% in a single day, while U.S. stocks later recovered. Through an X post on April 3, Edwards compared the situation to the 2022 bear market bottom, noting U.S. business expectations at levels seen in 2000, 2008, and 2022years tied to major downturns.
The Philadelphia Feds Business Outlook Survey (BOS) reported business confidence falling below 15, a marker of economic strain, per the survey. Edwards cautioned, If the tariff war escalates or corporate margins shrink, we could see further downside.
Bitcoin traders are watching critical levels. A daily close above $84,000 could signal bullish momentum, per Capriole Investments. The next target is $91,000, a key resistance, per the analysis. However, if prices fall, Bitcoin may test the $71,000 support zone, where a rebound could occur, analysts note.
Capriole Investments stated that the U.S. macroeconomic environment will determine Bitcoins next major move. With economic pressure rising, analysts predict Bitcoin could hit $71,000 if conditions worsen.
Feds Liquidity Shift: A Potential Catalyst
The Federal Reserves recent policy easing offers hope. The Fed has relaxed its tight monetary stance, raising speculation about a return to quantitative easing (QE). Edwards asked, How long until the Powell printer starts humming?
Referring to an increase in M2 money supply, which historically boosts Bitcoins price. Analysts believe if M2 liquidity rises, Bitcoin could begin recovering by May 2025, per the report.
The Feds actions align with market needs. On March 19, 2025, a dispatch analyst at Nexo noted that ending the Feds quantitative tightening could boost liquidity and risk assets like Bitcoin.
Federal Reserve Chair Jerome Powell expressed doubts about sustained inflationary impacts from Trumps tariffs on March 17, 2025, referencing 2019, when tariff-related inflation was temporary.
Powells comments suggest the Fed may remain on hold, potentially supporting Bitcoins recovery, per the post.
Bitcoin price struggles reflect broader market dynamics. The crypto market peaked at $2.85 trillion before dropping. U.S. business confidence, as measured by the Philadelphia Feds BOS, fell below 15, a level tied to high-risk periods. Edwards noted that while BOS data isnt always accurate, it has historically signaled market stress. Meanwhile, gold has outperformed Bitcoin,
Whats Next for Bitcoin?
Analysts see a potential turning point. If the Fed increases M2 liquidity, Bitcoin could recover by May 2025. However, the $71,000 support level looms if economic pressure persists. The Feds next moves, expected after the April 2, 2025, tariff announcement, will be crucial,
Read more: https://zycrypto.com/fed-to-the-rescue-bitcoin-could-recover-by-may-as-liquidity-eases-analysts-say/
Text source: ZyCrypto
