Trump may replace Federal Reserve Chairman Jerome Powell: How will Bitcoin react?

US President Donald Trump has reignited discussions about replacing Federal Reserve Chairman Jerome Powell. This has shocked traditional and crypto markets, with Bitcoin expected to reclaim $105,000.

The implications are significant and extend beyond monetary policy to the trajectory of Bitcoin and alternative currencies and overall economic risk sentiment worldwide.

Trump's plan for the Federal Reserve Chair shakes the markets

On June 6, Trump announced that his choice for the next Federal Reserve Chairman would be announced "very soon," although Jerome Powell's term will not officially end until May 2026. This move could create a political earthquake in monetary policy circles, with Trump ready to appoint a "ghost" chairman for the Federal Reserve in waiting.

Two months ago, when Trump suggested firing Powell, the US dollar index (DXY) dropped, leading to a sharp increase in Bitcoin's value. As reported by BeInCrypto, Bitcoin's value saw a sharp rise as the market priced in monetary easing and declining confidence in the Federal Reserve's independence.

When Trump backed down in late April, Bitcoin's price briefly corrected, illustrating how connected cryptocurrency assets are now to the credibility of the Federal Reserve and Treasury policy:

Reuters reported Trump saying to reporters in the Oval Office on Tuesday: "I have no intention of firing him... I would like to see him more active regarding his idea of lowering interest rates."

Now that the story of replacing Powell has returned to the table, Bitcoin has shown volatility once again.

Rananajai Singh, founder of TodayCrypto, said: "This could create a massive jolt in the markets. It could spark a rising cryptocurrency market or cause significant declines."

Can Trump fire Powell?

It is important to note that, legally, Trump cannot directly fire Powell from the Federal Reserve Chair unless he seeks loopholes. Federal Reserve law only allows for the removal of the current Federal Reserve Chair for "good cause," which historically means committing ethical violations or severe misconduct.

However, Trump may nominate Powell's successor before the 2026 deadline, a strategy proposed by Scott Besant from K Square Capital.

...the candidate will have to wait until they take over the chairmanship of the powerful Federal Open Market Committee of the central bank, which determines one of the most important interest rates in the country... The guidance, forecasts, and potential criticisms of this person regarding the actions of the Federal Reserve will significantly impact financial markets," explained John Herold.

Besant is also the US Treasury Secretary. Trump is considering the possibility of firing the Federal Reserve Chairman.

Despite the existing loopholes, some say that removing the law without cause would lead to legal and market chaos.

What does the election of a new Federal Reserve Chairman 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 US Treasury bond risks.

Kendrick stated: "The threat of removing US Federal Reserve Chairman Jerome Powell falls within Treasury risks, so hedging is in place."

As monetary uncertainty increases, Bitcoin is increasingly viewed as a decentralized alternative to fiat currency-managed systems. This is especially true during times of political intervention:

If the Federal Reserve lowers interest rates too late, we would significantly reduce interest rates, both long-term and short-term, on outstanding debts. Biden has leaned towards short-term policies. Inflation is no longer noteworthy (anymore), but if it returns, he has to raise the "interest rate" to combat inflation. It’s very simple! It costs our country a fortune. Borrowing costs need to be much lower! Trump wrote on Truth Social.

Trump believes that the United States would be better off economically without Powell, a sentiment he evokes amid rising debt. In this context, experts see Bitcoin as a lifeline. Based on this perspective, this leading digital currency seeks to reclaim the $105,000 threshold.

Meanwhile, the repercussions extend beyond Bitcoin. Alternative currencies, which 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 holders of alternative currencies. The main reason for the delay in the alternative currency season is the QT program and interest rate cuts. But this may change soon... The new Federal Reserve Chairman will certainly adhere to [Trump's] demands. The alternative currency season is coming, as analyst Cas Abbe wrote.

It is likely that a Trump-aligned Federal Reserve Chairman will call for sharp interest rate cuts, easing financial restrictions, and allowing liquidity flows that fuel rising cryptocurrency markets. However, there is still a chance of a retreat:

That day would be a global black swan event if it happens," warned World of Finance, a popular account on X.

This move could lead to a new bull market or trigger systemic shocks.

$BTC

BTC$XRP

107,584.01

+1.62%

#BinanceAlphaAlert #TrumpTariffs #elaouzi #