Bitcoin Hovers Near $85,000 Amid Political Risks, Economic Warnings

Bitcoin is hovering near $85,000 as traders assess rising political risks in Washington and fresh warnings about the health of the U.S. economy. The pressure comes from two fronts: President Donald Trump has reportedly been considering firing Federal Reserve Chair Jerome Powell. Trump, who nominated Powell during his first term, has clashed with him over the central bank’s response to inflation and, more recently, Powell’s critique of Trump’s revived tariffs. Treasury Secretary Scott Bessent and former Fed Governor Kevin Warsh have both warned Trump against removing Powell, arguing it could destabilize financial markets and undermine the Fed’s independence.

Adding to the concerns is a sharp drop in the Philadelphia Fed’s manufacturing index, which plunged to its lowest reading in two years. At the same time, prices paid by manufacturers jumped, stoking concerns that the U.S. could slip into stagflation—a combination of slowing growth and rising prices. On crypto derivatives exchange Deribit, traders continued to chase call options targeting $90,000 to $100,000 BTC in May and June, indicating expectations of a potential breakout. However, many are also buying put options around $80,000, hedging against a drop. The VIX, Wall Street’s “fear index,” remains elevated, a sign that investor nerves haven’t settled.

Crypto exchange Kraken has laid off hundreds of employees in recent months as part of a broader effort to streamline operations ahead of a potential U.S. initial public offering. The cuts follow a round of layoffs in October 2024, when Kraken reduced its workforce by 400 — roughly 15% — shortly after board member Arjun Sethi became co-CEO alongside David Ripley. The company has since continued to shed roles in what insiders describe as a rolling effort to improve Kraken’s EBITDA, or earnings before interest, tax, and amortization. Kraken’s leadership had previously said the company had accumulated too many layers of management and needed to move faster. The recent workforce reductions appear aimed at trimming redundancies while focusing on areas that support the company’s growth.

HashKey Capital is rolling out what it says is Asia’s first XRP Tracker Fund, targeting professional investors looking for easier access to the digital asset used in Ripple’s payments infrastructure. The fund, unveiled Friday, is designed to mirror the performance of XRP without requiring investors to directly manage or custody the token. It offers monthly liquidity and supports both cash and in-kind subscriptions, and is aimed at institutions navigating crypto markets in regulated environments. Ripple, a major player in the XRP ecosystem, is an anchor investor in the fund. The move deepens Ripple’s relationship with HashKey, which already manages Hong Kong-listed spot ETFs for bitcoin and ether. Vivien Wong, a partner at HashKey Capital, said the firms will continue to collaborate on future financial products, with one possibility being a tokenized money market fund on the XRP Ledger.