US President Donald Trump has again raised the question of replacing Federal Reserve Chairman Jerome Powell, provoking heated discussions in both traditional and cryptocurrency markets.
We are analyzing what will happen to Bitcoin $BTC if the president actually sends the Fed chairman into retirement. The consequences of this move will extend far beyond the traditional asset segment.
Trump's plan to appoint a new Fed chairman shook the markets
On June 6, Donald Trump announced that he would soon present a candidate for the position of Fed chairman, although the term of the current head Jerome Powell does not expire until May 2026. Powell's resignation could be a serious shock to US monetary policy: markets fear that 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 decrease in the Fed's independence.
At the end of April, Trump softened his position, stating that he does not intend to fire him... He just wishes that he would actively lower interest rates. Bitcoin adjusted in response to these comments, demonstrating the close link between crypto assets and Fed policy.
"This could have a significant impact on the markets. There is potential for both a rise in cryptocurrencies and a significant drop," noted Ranandjay Singh, founder of TodayCrypto.
Can Trump fire Powell
The Federal Reserve Act significantly limits the ability to prematurely remove the Fed chairman. Dismissal is only allowed 'for cause', which is traditionally interpreted as ethical violations or abuse of power.
Scott Bessent from Key Square Capital, who serves as US Secretary of the Treasury, proposed an alternative approach: to appoint a successor to Powell before the end of his term 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, the leadership, forecasts, and possible criticism of the Fed's actions from this person will have a significant impact on the financial markets," explains John Herold.
Experts warn that an attempt to fire Powell without valid grounds could provoke a serious legal crisis and cause chaos in the financial markets.
Conclusion
Bitcoin has evolved from a simple tool for inflation protection to insurance against risks in the traditional finance (TradFi) sector and political interference in the workings of the Treasury. The threat of the Fed chairman's resignation relates to Treasury risks, so Bitcoin will react as a defensive asset, noted Jeff Kendrick, head of research in the digital asset market at Standard Chartered.
A potential change in leadership at the Fed could become a catalyst not only for Bitcoin, aiming for the $105,000 mark, but also for altcoins.
"This is important news for altcoin holders. The main reason for the delay in the alt-season is the QT program and the slow rate decrease. But everything could change soon," forecasts analyst Cas Abbé.
If Trump appoints someone to the position of Fed chairman who supports his policies, rates will decrease faster, which will boost liquidity in the market and stimulate the growth of cryptocurrency assets. However, as warned by World of Finance, this day will become a black swan on a global scale.
