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Bitcoin Traders Eye Powell’s Testimony, Core PCE, and Tariff Deadline as Iran Tensions Simmer
Calm in oil markets after the U.S. airstrikes on Iran’s nuclear sites has frustrated bearish forecasts that predicted a steep decline in bitcoin prices. Bitcoin has largely stayed above $100,000 despite Middle East turmoil, shifting traders’ focus to the week’s key events that could sway markets.
Powell’s Testimony Takes Center Stage
The marquee event this week is Federal Reserve Chair Jerome Powell’s semi-annual testimony before Congress. Powell is expected to face tough questioning from Republican lawmakers over the Fed’s reluctance to cut rates—a point former President Donald Trump has repeatedly criticized on social media, accusing Powell of costing the nation hundreds of billions of dollars.
Despite political pressure, Powell is likely to emphasize the Fed’s independence and data-driven approach to rate decisions. Traders are eager to parse his comments for any hints on the timing and magnitude of potential rate cuts.
Trump-appointed Fed Governor Christopher Waller recently signaled that rate cuts could begin as early as July, fueling speculation about the Fed’s next moves.
“With market expectations for inflation well anchored, cracks forming in the labor market, and housing activity still soft, there’s a solid case for the Fed to pivot dovish at the July meeting and hint at a September cut—a path already priced into U.S. swaps,” said Chris Weston, head of research at Pepperstone, on X.
A dovish tilt from Powell could ignite renewed risk appetite across financial markets, potentially lifting BTC further.
Debate Over Rate Cuts Continues
While markets are currently pricing in two quarter-point Fed cuts this year, not everyone agrees.
“We believe clarity on inflation—especially whether tariffs are simply a one-off price shock or a trigger for persistent inflation pressures—might not come before the December FOMC meeting. That suggests just one rate cut this year,” analysts at ING said Friday. “However, if labor market weakness deepens, a 50-basis-point cut could still be on the table.”
Core PCE Data in Focus
The week’s key data release is Friday’s core personal consumption expenditures (PCE) price index—the Fed’s preferred inflation gauge. Economists expect a modest 0.1% monthly increase in May, implying annualized growth of 2.6% and a three-month annualized rate of 1.6%, per Pepperstone estimates.
A softer PCE reading would bolster rate-cut hopes. Yet ING warns that Trump’s tariffs, whose impact could start in July, might stir fresh inflation pressures.
Trump’s 90-day pause on reciprocal tariffs, announced in April, is set to expire on July 9. Heavy “Liberation Day” tariffs would then come into effect unless new deals are secured. So far, Trump has finalized an agreement with the U.K. and unveiled a framework with China—though Beijing hasn’t signed off yet, and the European Union remains on the sidelines.
Iran Tensions Persist Beneath the Surface
Meanwhile, geopolitical risks haven’t vanished. Even without physically blocking the Strait of Hormuz—a vital passageway for about 20% of the world’s oil—Iran could disrupt global shipping simply by threatening its closure. Such threats are already driving up shipping insurance costs, which have surged from 20 cents per barrel to 80 cents, according to the South China Morning Post, citing Xclusiv Shipbrokers in Athens.
“By sowing enough doubt about the strait’s security, Iran could raise maritime costs to levels that significantly impact crude and gas supply,” Weston noted.
Traders enter the week cautiously optimistic, balancing macroeconomic risks and geopolitical uncertainties while watching for signals from Powell and Friday’s crucial inflation report—factors that could chart the next course for bitcoin and broader markets.
