Monetary stimulus in China and Europe increases investors' focus on Bitcoin price.

The US Federal Reserve is under political pressure to cut rates, as the DXY weakens.

Bitcoin (BTC) traders were somewhat puzzled by BTC price jumping to $85,000, especially since the S&P 500 index has dropped 5.7% in April, and this move came after the cryptocurrency managed a 14% rebound off its trade-war induced crash to $74,400.

Investors are cautiously optimistic, but multiple events and data points to further gains above $90,000. Several metrics and events support a “decoupling,” meaning Bitcoin’s price is not closely following traditional financial instruments. However, some skepticism emerges as BTC has not yet matched gold’s performance. Gold reached an all-time high of $3,358 on April 16, leading to speculation that governments and central banks are increasing their gold reserves.

Global stimulus rises as US economy shows early weakness

As central banks respond to the threat of an economic recession, the chances of an increase in monetary supply are rising. While the U.S. Federal Reserve (Fed) has held off on lowering interest rates or expanding its balance sheet, other nations have already taken such steps. This puts more pressure on the U.S. economy, which is beginning to show signs of weakness.

In China, new bank loans in March rebounded more than expected to $500 billion, over 20% higher than analysts had predicted and a strong recovery from the previous month’s decline. According to Reuters, the PBOC has promised to increase stimulus measures to reduce the impact of the trade war with the United States.

On April 17, the European Central Bank cut interest rates for the seventh time in a year to support the eurozone economy. The ECB has lowered the cost of capital to its lowest level since late 2022. Several investment banks have also reduced their inflation forecasts for the region, as the tariff war could reduce the region’s gross domestic product by 0.5%, according to Reuters.

Weaker U.S. dollar and Bitcoin miners’ long-term commitment

Further adding pressure on the U.S. Federal Reserve to end its restrictive monetary policy is the weakening of the U.S. dollar compared to major global currencies, as the DXY Index has dropped to its lowest level in three years. A weaker dollar usually helps exports, which can be positive for the current account balance, but this is unlikely to last during a trade war.

Investor confidence has also been hurt by U.S. President Donald Trump’s public criticism of Fed Chair Jerome Powell’s administration. This situation makes it harder for the U.S. Treasury to rely on issuing Treasurys to stay afloat, which further weakens the U.S. dollar. President Trump even said that Powell’s removal “cannot come fast enough,” while also calling for lower interest rates.

However, when looking at the current macroeconomic data, there is little reason to support a more relaxed monetary policy from the U.S. Fed, especially after the latest U.S. jobless claims reported on April 17. Initial claims fell by 9,000 to 215,000 in the week ending April 12, according to the U.S. Labor Department. Powell repeated on April 16 that the labor market is in a “solid condition,” according to Reuters.

Related: When gold price hits new highs, history shows ‘Bitcoin follows’ within 150 days — Analyst

Bitcoin miners have also shown a strong long-term commitment, as the hashrate increased by 8% compared to the previous month. Since the Bitcoin halving in April 2024, traders were worried that lower profits would cause many miners to leave, possibly leading to a sell-off, since miners reportedly hold almost 1.8 million BTC, according to Glassnode.