Bitcoin has suddenly rocketed higher, passing its previous all-time high and climbing to over $106,000 as incoming U.S. president Donald Trump confirms his plan for a bitcoin game-changer.
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The bitcoin price has more than doubled since dropping to August lows, helped by Tesla billionaire Elon Musk fanning flames of doubt over the future of the U.S. dollar.
Now, as a leak reveals Russia could be poised to beat the U.S. to a bitcoin reserve, the Federal Reserve has been warned its “biggest nightmare” could come true in 2025.
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Federal Reserve chair Jerome Powell could see the Fed’s “nightmare” scenario play out next … [+]
“We believe stagflation is coming in 2025, the Fed’s biggest nightmare,” analysts with The Kobeissi Letter posted to X, referring to a combination of economic stagnation and soaring inflation.
Kobeissi analysts pointed to a report from asset management giant Apollo which predicted “a rebound in inflation in 2025 and not a softening to justify Fed [interest rate] cuts.”
“The probability is rising that the Fed may have to raise interest rates in 2025,” Torsten Sløk, Apollo’s chief economist, wrote in the report, asking: “Will we see a repeat of the 1970s with the Fed easing policy too quickly, triggering a rise in inflation in 2025?”
Last week, the influential billionaire investor Ray Dalio warned of a looming “debt crisis” which he expects will trigger a sharp decline in the value of the U.S. dollar.
U.S. debt has soared over recent years, topping $34 trillion at the beginning of 2024, with Covid and lockdown stimulus measures contributing to massive government spending and helping to send inflation spiraling out of control in 2022.
Inflation of over 10% forced the Federal Reserve to hike interest rates at a historical clip, pushing up debt interest payments and fueling fears of a “death spiral.”
This week, the Federal Reserve is widely expected to cut interest rates by a quarter-point, despite data showing inflation ticked higher last week, with a Bloomberg survey of economists finding a consensus for three further interest rate cuts in 2025.
However, a Financial Times poll of economists found the Fed will next year take a more cautious approach to interest rate cuts due to fears the Trump administration’s policies that include sweeping tariffs, deportations, and cuts to taxes and regulations, could stoke higher inflation.
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The bitcoin price has surged to an all-time high this year, rocketing higher as the Federal Reserve … [+]
“Inflation has come down more painlessly than I and most people had expected, but I think we may still be seeing that the last bit [getting to target] will be a little harder, and so that certainly is an unlikely environment for the Fed to be in a hurry to reduce rates,” Jonathan Wright, a former Fed economist now at Johns Hopkins University, told the FT.
Expectations of this week’s Fed interest rate cut have helped push the bitcoin price higher, with analysts predicting momentum could help it climb even higher in coming weeks.
Bitcoin’s “move into all-time high territory, including this morning’s push above $106,000, confirms the bullish bias,” Alex Kuptsikevich, FxPro’s chief market analyst, said in emailed comments.
“This is especially important after a three-week consolidation near the $100,000 level. An acceleration in growth is now likely if unexpected news from the traditional financial markets doesn’t stop this rally.”
