The decision comes as Bitcoin continues to trade above the critical $100,000 level, reflecting ongoing investor confidence despite macroeconomic uncertainty.

In its latest policy statement, the Federal Open Market Committee (FOMC) removed previous language acknowledging progress on inflation. Federal Reserve Chair Jerome Powell underscored that any future rate cuts would depend on evolving economic indicators, particularly labor market strength and inflation trends. While markets had anticipated a hold on rates, Powell’s cautious approach toward potential reductions has left investors weighing the likelihood of easing later in the year.

Bitcoin responded with a 1% decline, briefly touching $102,000 after the Fed’s announcement. The cryptocurrency market, as a whole, saw broad declines, with major assets like Solana and XRP facing more significant losses. Despite short-term fluctuations, Bitcoin has managed to maintain a foothold above $100,000, a psychological and technical support level that traders closely watch.

Bitcoin is holding strong well above $100,000, source Bitcoin Liquid Index

Macroeconomic and Political Considerations

The broader economic direction remains complex. The first FOMC meeting under President Donald Trump’s new administration has added uncertainty as the government considers policy shifts that could impact market sentiment. Proposed 25% tariffs on Mexico and Canada, along with unresolved federal spending issues, contribute to a less predictable economic trajectory.

Investor expectations for monetary easing remain in flux. The CME FedWatch tool indicates a nearly even probability of a 25-basis-point rate cut in either June or July. However, with markets currently pricing in a maximum of two potential rate reductions in 2025, sentiment remains cautious.

Source: CME GROUP

Market Reactions and Bitcoin’s Outlook

Bitcoin’s recent volatility mirrors broader financial markets, which are responding to both Federal Reserve policies and global economic developments.

Earlier in the week, the cryptocurrency briefly dipped below $100,000 following the DeepSeek AI launch, which erased $1 trillion in global market value. However, Bitcoin quickly rebounded, reflecting underlying market resilience and reduced exchange-held reserves, which contribute to long-term scarcity.

All eyes now to the Czech Republic. Aleš Michl, the Governor of the Czech National Bank (CNB), is advocating for a bold shift in the bank’s asset management strategy by proposing to allocate up to 5% of its €140 billion reserves into Bitcoin. This move, if approved, would position the CNB as the first Western central bank to hold cryptocurrency assets.

A bold move from Aleš Michl, Source: X

Michl acknowledges Bitcoin’s volatility but emphasizes its growing appeal as an alternative investment, especially following the introduction of Bitcoin exchange-traded funds by major firms like BlackRock. He believes that diversifying into Bitcoin could enhance the bank’s portfolio, despite the inherent risks.

However, this proposal is not without controversy. Critics argue that Bitcoin’s unpredictable nature makes it a precarious choice for central bank reserves. Michl himself concedes that the investment could become worthless, drawing parallels to past corporate failures like Enron. Yet, he remains optimistic, suggesting that Bitcoin’s value is likely to rise independently of external influences, such as U.S. President Donald Trump’s pro-crypto stance. This initiative reflects Michl’s investment banking background and his willingness to pioneer unconventional strategies in central banking. We’re rooting for you Michl!