US President Donald Trump has again raised the issue of replacing Federal Reserve Chair Jerome Powell, sparking heated discussions in both traditional and cryptocurrency markets.
We explore what will happen to Bitcoin if the president truly sends the Fed chair into resignation. The consequences of this step will go far beyond the traditional asset segment.
Trump's plan to appoint a new Fed chair shocked the markets.
On June 6, Donald Trump announced that he would soon present a candidate for the position of Fed chair, although the term of the current chair, Jerome Powell, does not expire until May 2026. Powell's resignation could be a significant shock to US monetary policy: markets fear the president will appoint his 'puppet' to this position.
Two months ago, Trump's first statement about firing Powell led to a drop in the US dollar index (DXY) and a sharp rise in Bitcoin. The market reacted to the prospect of easing monetary policy and a possible reduction in the Fed's independence.
At the end of April, Trump softened his stance, stating that he does not plan to fire him… He just wishes he would lower interest rates more aggressively. Bitcoin corrected in response to these comments, demonstrating the close connection between crypto assets and Fed policy.
"This could have a significant impact on the markets. Both a rise in cryptocurrencies and a significant decline are possible," noted Ranandjay Singh, founder of TodayCrypto.
Can Trump fire Powell?
The Federal Reserve Act significantly limits the ability to prematurely remove the Fed chair. Dismissal is only allowed 'for cause,' which is traditionally interpreted as ethical violations or abuse of power.
Scott Bessent of Key Square Capital, serving as US Treasury Secretary, proposed an alternative approach: appoint Powell's successor before his term expires in 2026.
"The nominee will have to wait to lead the Federal Open Market Committee, which sets one of the key interest rates in the country… however, this person's leadership, forecasts, and potential criticism of the Fed's actions will significantly influence the financial markets," explains John Herold.
Experts warn that attempting to fire Powell without valid reasons could trigger a serious legal crisis and cause chaos in financial markets.
What the new Fed chair will mean for Bitcoin and altcoins.
Bitcoin has evolved from a simple inflation hedge to an insurance against risks in the traditional financial (TradFi) segment and political interference in the Treasury's operations. The threat of the Fed Chair's resignation relates to Treasury risks, so Bitcoin will react as a safe-haven asset, noted Jeff Kendrick, head of digital asset market research at Standard Chartered, in a comment to BeInCrypto.
A potential change in Fed leadership could be a catalyst not only for Bitcoin aiming for the $105,000 mark but also for altcoins.
Bitcoin (BTC) price dynamics. Source: BeInCrypto
"This is important news for altcoin holders. The main reason for the delay in the altseason is the QT program and slow rate cuts. But everything could change soon," predicts analyst Cas Abbé.
If Trump appoints someone who supports his policies as Fed chair, rates will decrease faster, increasing liquidity flow into the market and stimulating the growth of cryptocurrency assets. However, as World of Finance warns, this day could become a black swan on a global scale.