The public conflict between President Donald Trump and Federal Reserve Chair Jerome Powell is escalating, leading investors to monitor whether political pressure could drive interest rate cuts – which typically boost risk assets like Bitcoin.
Disagreements and limitations on the President's power
This rift arises as Republicans grow increasingly frustrated with #Fed 's stance of "higher rates for a longer time," arguing that it weakens the stock and crypto markets. While Trump had previously intended to fire Powell, legal precedents like the 1935 ruling (Humphrey's Executor v. United States) protect Powell from dismissal unless there is misconduct, not merely policy disagreement.
However, President $TRUMP could still exert pressure by publicly criticizing Powell, holding "hostile" hearings in Congress, or "weaponizing" budget review processes. Recently, a Trump ally, Representative Anna Paulina Luna, filed criminal charges against Powell, accusing him of "deliberately misleading" Congress about the costs of renovating the FED headquarters.
Impact on the Crypto market
Traders are pricing in the possibility of only two interest rate cuts this year. Some experts suggest that firing Powell could temporarily boost crypto prices due to a weaker dollar and expectations of rate cuts. However, the long-term financial instability stemming from these leadership disputes could put pressure on risk assets, including crypto.
Although in the short term, crypto may be viewed as a "chaos hedge" against the weakening dollar and the politicization of the FED, in the long run, an unstable U.S. financial system could significantly harm most risk assets. #anhbacong
