A Dovish FED is Expected Following Today's US Economic Data: How Could It Affect Bitcoin Price?

According to market analysts, the complex US economic data is fueling speculation that the FED may adopt a more dovish stance on interest rates, which could create potential support for Bitcoin and other risky assets.

Today, several important US macroeconomic indicators painted a picture of stagnant growth and persistent inflationary pressures, increasing uncertainty in financial markets. The latest ADP report showed that job creation in the private sector slowed significantly in April. Only 62,000 new jobs were added, well below expectations of 108,000 and considerably lower than the 147,000 figure from March.

At the same time, the U.S. GDP for the first quarter unexpectedly contracted by 0.3%, indicating the first negative quarterly growth since 2022. Economists had predicted a modest expansion of 0.2%. Meanwhile, the inflation data from the Personal Consumption Expenditures (PCE) index, which is the FED's preferred indicator, presented a mixed picture. The March PCE increased by 2.3% year-on-year, slightly above the expectation of 2.2%, while the Core PCE, which excludes food and energy prices, was in line with expectations at 2.6% year-on-year and decreased from the revised 3.0% in February.

The combination of slow growth and stable inflation has revived stagflation rumors and led to speculation that the FED may have to ease its monetary policy sooner than expected.

David Hernandez, a crypto investment expert at 21Shares, stated in a statement, "FED fund futures reflect an increasing likelihood of 4+ rate cuts this year as the FED navigates clear signs of declining inflation and economic slowdown," and added, "This delicate balancing act will be at the center of market dynamics in the coming weeks."

After the release of economic data, Bitcoin briefly fell below $94,000 and experienced a 1% decline during the day. However, some analysts say that lower interest rates and a softer US dollar could pave the way for a resurgence in the crypto markets.

Dr. Kirill Kretov, a senior automation specialist at CoinPanel, stated, "A weakened dollar, better liquidity resulting from a looser monetary policy, and lower Treasury yields provide a more supportive macro backdrop for Bitcoin."

Kretov also stated that the increasing pressure from President Donald Trump to lower interest rates on the Fed, combined with easing concerns over tariffs and weak liquidity in the crypto markets, could amplify the effects of any dovish policy shift.

"A dovish shift seems even more likely when we factor in the surprise -0.3% GDP pressure," Kretov said, adding: "Even modest inflows could push BTC sharply higher. This market is ready to move to the upside, but at the same time it is hypersensitive to macro shifts."