Bitcoin Surges Past $87K Amid Dollar Decline Due to Fed Independence Concerns
April 21, 2025
By Omkar Godbole | Edited by Parikshit Mishra
In a remarkable display of strength, Bitcoin (BTC) surged over 2% to surpass the $87,000 mark, reaching a noteworthy $87,200. This significant increase comes amid growing concerns about the independence of the Federal Reserve, which have led to a dramatic decline in the U.S. dollar. The dollar index (DXY) plummeted to a three-year low on reports that former President Donald Trump is considering the removal of Federal Reserve Chairman Jerome Powell.
Market Overview
As Bitcoin experienced this bullish uptick, other major cryptocurrencies, including XRP, Ethereum (ETH), and Cardano (ADA), followed suit, albeit at a slower pace, each rising over 1%. XRP was valued at approximately $2.0849, while Ethereum traded at around $1,579.10. Despite the overall positive movement in the cryptocurrency market, some alternative coins experienced minor losses, including SOL, which decreased by 0.60%.
Major alternative cryptocurrencies reacted positively to the weakening dollar as well. The bullish trend in Bitcoin represents a stark contrast to the recent volatility seen in the cryptocurrency markets. According to data from CoinDesk, the BTC price breakthrough signifies a bullish conclusion to the recent price consolidation waxed between the $83,000 and $87,000 range.
U.S. Dollar Reaction to Political Developments
The forex market witnessed hedge funds selling the U.S. dollar against key currencies such as the euro, yen, and the Australian dollar, pushing the dollar index down to 98.5. This performance marks the lowest the dollar index has reached since April 2022, reflecting a 10% decline over the last three months. Analysts note that such weakness in the dollar usually fosters more risk-taking behavior in financial markets.
This downturn in the dollar correlated with a surge in gold prices, which climbed to a record high of $3,382 per ounce, with a 28% increase since the start of the year. Futures connected to the S&P 500 and Nasdaq also registered losses, trading 0.5% lower.
Observers attribute the selling of the dollar, as well as the rallies in Bitcoin and gold, to comments made by Kevin Hassett, Director of the National Economic Council, which suggested Trump may indeed be preparing to remove Powell.
Expert Insights
Markus Thielen, founder of 10x Research, highlighted the connection between Bitcoin’s recent rise to the weakening dollar: “The move in bitcoin to $87,000 appears to be driven by a sharp drop in the U.S. dollar and a +2% rally in gold, both triggered by Trump’s push to replace Fed chair Powell,” he explained.
In recent statements, Trump reiterated his dissatisfaction with Powell, expressing on Truth Social that "Powell’s termination cannot come fast enough," and calling for lower interest rates shortly thereafter. Meanwhile, Powell indicated that the Federal Reserve would remain cautious and wait for more economic data before making any significant changes to interest rates, warning of potential stagflation.
In response to the potential implications of Trump’s actions, Chicago Fed President Austan Goolsbee warned that terminating Powell could jeopardize the Federal Reserve’s credibility.
Conclusion
As Bitcoin and other cryptocurrencies react to the evolving political landscape in the United States, traders will undoubtedly continue to closely monitor developments surrounding the Federal Reserve and its leadership. The interplay between these financial markets not only reflects current sentiment but also showcases the dynamic relationship between traditional finance and emerging digital assets.
This unexpected surge in Bitcoin pricing continues to highlight the cryptocurrency’s evolving role as a potential hedge against currency fluctuations and economic uncertainty.
For ongoing updates and insights into cryptocurrency market trends, stay tuned to our coverage at CoinDesk.
About the Author
Omkar Godbole is a Co-Managing Editor at CoinDesk’s Markets team based in Mumbai. With extensive experience in finance and a background in market analysis, he provides valuable insights into digital asset trends.
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