The Fed's interest rate policy and its impact on the cryptocurrency market
On June 21, U.S. Secretary of Commerce Howard Lutnick publicly opposed the Fed's decision to maintain interest rates at 4.25%-4.5%. He argued that Chairman Jerome Powell appeared 'unjustifiably fearful' for not lowering interest rates, despite uncertainties regarding future predictions. The cryptocurrency market often reacts strongly to the Fed's decisions, especially when interest rates remain high, directly affecting investment flows and the value of cryptocurrencies like Bitcoin and Ethereum.
Secretary Lutnick and the debate over tariff policy
In a sharp rebuttal, Lutnick clarified Powell's lack of knowledge regarding tariff levels. He emphasized that tariffs no longer apply to personal computers, contrary to Powell's assertions about the impact of tariffs on prices. Analyses of the impact of tariffs on the semiconductor supply chain and technology also affect the cryptocurrency market's sentiment, especially for coins like Litecoin or Ripple, which are sensitive to international trade policies.
Reactions from DOGEai and analysts regarding the Fed's policy
Dogecoin AI (DOGEai) has criticized the Fed's stubbornness, claiming that maintaining high interest rates is an act of 'economic distortion'. These experts argue that this decision only complicates the situation further, causing money to flow into DeFi projects and fast-growing tokens. Additionally, analyses show that maintaining high annual interest rates has taken away approximately $1 trillion from consumers to pay off debts, reducing the cryptocurrency market's resilience in the long term.
Political representatives debate the role of the Fed
The reality is that Congress is spending, printing, and borrowing too much money, causing the Fed to lose control over interest rates. Foreign banks and governments are demanding returns of over 4.5% on 10-year government bonds. This is the time to reconsider the role of the Fed and the objectives of monetary policy.
-- Thomas Massie (@RepThomasMassie) June 21, 2025
The uncertain progress of monetary policy amidst Congress and global markets
Senator Thomas Massie pointed out that the government's excessive spending, printing, and borrowing have diminished the Fed's ability to control interest rates. Foreign investors are demanding returns higher than 4.5%, which puts significant pressure on the cryptocurrency market, especially on cyclical and high-yield coins. Meanwhile, feedback from Boston analysts indicates that the Fed's current policy is still based on strategic objectives, not solely dependent on congressional budgets.
The possibility that Trump will appoint a 'shadow chairman' of the Fed temporarily
Krishna Guha from Evercore stated that there are rumors that President Trump may appoint a 'shadow chair' to control monetary policy before Chairman Jerome Powell's term ends. This policy aims to create quicker influence in interest rate decisions, thereby making cryptocurrencies like Bitcoin and Ethereum more attractive to investors. Potential candidates include former Fed Governor Kevin Warsh, current Governor Christopher Waller, and Treasury Secretary Scott Bessent, all of whom show a strong inclination towards lowering interest rates.
Market expectations and analysts' strategies
In the context of the market maintaining interest rates, divergent opinions about the Fed's policy are increasing. Some analysts argue that the Fed's restrictive policy may ultimately promote the growth trend of cryptocurrencies, especially if financial reform bills like BBB are effectively implemented to help control inflation and stimulate new cash flow.
Source: https://tintucbitcoin.com/chairman-fed-powell-fears-cryptocurrency-risk/
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