Daily Market Dispatch – May 7, 2025. Overview.

07 May 2025, 15:51

Daily Market Dispatch – May 7, 2025 Overview Markets opened higher on Wednesday, with attention increasingly centered on today’s Federal Reserve policy decision – a moment expected to steer sentiment across risk assets. While the Fed is widely expected to keep rates unchanged at 4.25% – 4.50%, investors are closely watching for clues in Chair Powell’s commentary on how the central bank plans to navigate slowing growth and persistent inflation. U.S. equity futures climbed around 0.5% across major indexes following a Tuesday sell-off, while Bitcoin reclaimed $96,000 amid recovering risk appetite. Confirmation that U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet Chinese officials in Switzerland this week helped ease geopolitical tensions. Still, caution prevails ahead of today’s FOMC statement. Bitcoin Bitcoin rose over 3% to conquer $97,000, lifted by renewed market optimism following news of upcoming U.S.-China trade talks. The world’s leading digital asset remains within a well-defined $90,000 – $97,000 range, with $100,000 still seen as a key breakout target. Today’s Fed decision is likely to set the tone for Bitcoin’s next move. A dovish tilt – downplaying inflation and emphasizing downside risks – could open the door for a retest of the $98,000 – $100,000 zone. A hawkish or ambiguous tone, by contrast, may pressure BTC back toward $92,000 support. Ethereum & Altcoins Ethereum traded at $1,827, rising 3% and holding firm above key support ahead of the long-anticipated Pectra upgrade, which successfully activated. Pectra increases the ETH staking limit to 2,048, streamlines validator operations, and advances Ethereum toward account abstraction – including allowing users to pay gas fees in stablecoins. The upgrade marks Ethereum’s biggest shift since the 2022 Merge, when Ethereum transitioned to a Proof-of-Stake mechanism. Altcoins followed Bitcoin’s rise – XRP climbed 1.6% to $2.14, with mid-term holders showing 11% average gains despite price volatility. Solana (SOL) and Cardano (ADA) rose 1% and 2.6%, respectively. Macro & Institutional The Fed is expected to hold its target rate at 4.25% – 4.50% today, but markets are primed for volatility based on Powell’s tone. Economic signals remain conflicting: Q1 GDP contracted by 0.3%, core PCE inflation sits at 3.5%, and unemployment has ticked up to 4.2%. This stagflationary backdrop leaves the Fed with limited flexibility. Powell’s guidance will be critical. Markets will be listening closely for any indication of cuts later this year, especially as new tariffs and softening consumer spending cloud the growth outlook. If Powell acknowledges downside risks or signals flexibility, crypto and equities may find renewed strength. If he focuses on inflation persistence, defensive flows could resume. Looking Ahead All eyes are on today’s FOMC decision with Chair Powell’s press conference immediately afterward expected to shape sentiment across risk assets. While the Fed is anticipated to hold rates steady, the tone of Powell’s commentary will likely drive near-term positioning — especially in light of soft Q1 GDP, elevated inflation, and a resilient labor market. Ethereum’s Pectra upgrade has gone live, adding another key development for the week. On Thursday, attention will shift to the Bank of England’s interest rate decision and U.S. jobless claims. Investors will also be monitoring follow-through from the Fed’s guidance, potential updates on the U.S. Strategic Bitcoin Reserve, and progress on U.S.-China trade negotiations. With markets perched near technical pivot levels and volatility likely to rise, the remainder of this week may set the tone for the incoming couple of weeks. – Iliya Kalchev, Nexo Dispatch analyst For informational purposes only; not financial or investment advice.

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