U.S. President Donald Trump reignited discussions about replacing Federal Reserve Chair Jerome Powell. This has shocked traditional and crypto markets, with Bitcoin expected to regain $105,000.
The implications are significant, extending beyond monetary policy to the trajectory of Bitcoin and altcoins and global macroeconomic risk sentiment.
Trump's plan for the Federal Reserve Chair shakes the markets.
On June 6, Trump announced that his choice for the next Federal Reserve Chair would be announced "very soon," even though Jerome Powell's term won't officially end until May 2026. This move would create a political earthquake in monetary policy circles, with Trump poised to install a "ghost" chair of the Federal Reserve in waiting.
Two months ago, when Trump suggested dismissing Powell, the U.S. dollar index (DXY) dropped, leading to a sharp increase in Bitcoin's value. As BeInCrypto reported, Bitcoin's value surged sharply as the market priced in monetary easing and declining confidence in the Federal Reserve's independence.
When Trump pulled back in late April, the price of Bitcoin briefly corrected, illustrating how closely crypto assets are now tied to the credibility of the Federal Reserve and treasury policy:
Reuters reported Trump as telling reporters in the Oval Office on Tuesday, "I have no intention of firing him... I would like to see him be more active regarding his idea of cutting interest rates."
Now that the story of Powell's replacement is back on the table, Bitcoin has shown volatility again.
Rananjay Singh, founder of TodayCrypto, said: "This could cause a massive shock in the markets. It could spark a bull market in cryptocurrencies or lead to significant declines."
Can Trump dismiss Powell?
It is important to note that, legally, Trump cannot directly dismiss Powell from the Federal Reserve Chair unless he seeks loopholes. The Federal Reserve Act only allows for the dismissal of the current chair "for cause," which historically means committing ethical violations or gross misconduct.
However, Trump may nominate Powell's successor before the 2026 deadline, a strategy proposed by Scott Bessent of K2 Capital:
...the candidate will have to wait until they take over the powerful Federal Open Market Committee of the central bank, which sets one of the most important interest rates in the country... The guidance, forecasts, and potential criticisms of this person regarding the Federal Reserve's actions will heavily influence financial markets," John Herold explained.
Bessent is also the U.S. Treasury Secretary. Trump is considering the possibility of dismissing the Federal Reserve Chair.
Despite the loopholes, some say that removing the chair without cause could lead to legal and market chaos.
What does electing a new Federal Reserve Chair mean?
Jeff Kendrick, head of digital asset research at Standard Chartered, recently stated to BeInCrypto that Bitcoin is no longer just a hedge against inflation, but has become a hedge against traditional finance (TradFi) and the risks of U.S. Treasury bonds.
Kendrick said: "The threat of removing U.S. Federal Reserve Chair Jerome Powell falls within treasury risks, so hedging is present."
With increasing monetary uncertainty, Bitcoin is increasingly viewed as a decentralized alternative to fiat-managed systems. This is especially true in times of political intervention:
If the Federal Reserve lowers interest rates too late, we would significantly lower interest rates, both long and short term, on the outstanding debt. Biden has leaned towards short-term policies. Inflation is no longer a concern (anymore), but if it returns, he will have to raise the "interest rate" to combat inflation. It is very simple! It costs our country a fortune. Borrowing costs should be much lower! Trump wrote on Truth Social.
Trump believes that the United States would be better off economically without Powell, a sentiment fueled by rising debt. In this context, experts see Bitcoin as a lifeline. Based on this perspective, this leading digital currency is striving to regain the $105,000 threshold.
In the meantime, the repercussions extend beyond Bitcoin. Altcoins, which have lagged in 2025 amid quantitative easing and expectations of moderate interest rate cuts, may finally get the green light to rise.
This is the most important news for altcoin holders. The main reason for delaying the altcoin season is the QT program and interest rate cuts. But this could change soon... The new Federal Reserve Chair will definitely adhere to [Trump's] demands. The altcoin season is coming, as analyst Cass Abbey wrote.
It is likely that a Trump-loyal Federal Reserve Chair would call for sharp interest rate cuts, easing financial restrictions, and allowing liquidity to flow that fuels rising crypto markets. Nevertheless, there is still a possibility of a pullback:
It will be a global black swan event if it happens," warned World of Finance, a popular account on X.
This move could lead to the emergence of a new bull market or trigger systemic shocks.
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