Bitcoin Breaches $97K as Fed-Trump ‘Constitutional Crisis’ Triggers Flight to Safety

Institutional Capital Decouples from Equities Amid Washington Standoff

Bitcoin decoupled from traditional markets Wednesday, surging 4.8% to tap $97,000 even as the S&P 500 buckled under hot inflation data. The catalyst is no longer just liquidity cycles; it is regime uncertainty. With Fed Chair Jerome Powell revealing DOJ subpoenas targeting the central bank, investors are effectively pricing in a constitutional clash over monetary independence.

The Macro Breakpoint

Markets typically tank on high Producer Price Index (PPI) reports, which came in at 3% versus the expected 2.7%, but Bitcoin ignored the print entirely. Instead, the asset reacted to the “tariff limbo” created by the Supreme Court, which delayed a critical ruling on the administration’s trade levies. The uncertainty has paralyzed traditional risk assets, forcing capital into non-sovereign stores of value. The narrative has shifted from “inflation hedge” to “jurisdictional hedge.”

The Fed will PAUSE rate cuts in 2 weeks… PPI inflation is now up to its highest level since July 2025. The Kobeissi Letter

Liquidation Cascades

The move to $97k was violent. Data from Bitcoin Magazine confirms the rally triggered roughly $700 million in short liquidations, clearing resistance in minutes. Order books are now thin up to the psychological $100,000 barrier. If the Supreme Court continues to stall, the market lacks the clarity to sell, leaving the path of least resistance upward.