Prediction markets show skepticism about Donald Trump's ability to bend the Federal Reserve to his will this year. Despite the U.S. president's intention to fire the Fed chairman for what he considers a justifiable reason, market participants assess such a probability as low. On the Polymarket platform, the chances that Jerome Powell will be forced to leave the position of Fed chairman in 2025 are estimated at only ten percent. This indicates that investors do not believe in the possibility of reversing the independence of the central bank before Powell's term ends in May 2026.
Legal conflict surrounding Lisa Cook
Particular attention is drawn to Trump's desire to dismiss Fed board member Lisa Cook. In his address on Truth Social, he stated his intention to remove her from office due to allegations of mortgage fraud related to the period before her appointment. If these plans are realized, Cook would become the first sitting Fed chair to be dismissed by a president.
However, Cook herself has refused to resign, challenging the legitimacy of such a decision. She stated that removal 'for cause' should only apply in cases of improper performance of immediate duties, and not to personal financial transactions made prior to taking office. Markets assess the probability of Cook's dismissal before December thirty-first at twenty-seven percent. This indicates a certain legal and political risk, while still maintaining a high likelihood that she will retain her position.
Historical context of pressure on the Federal Reserve
Historical precedents indicate that previous presidents have also exerted pressure on the Federal Reserve. As noted in a Cato Institute article published in October 2024, such occurrences were more frequent than is commonly believed. In 1951, Harry Truman removed Fed Chairman Thomas McCabe to secure funding for military expenses. Lyndon Johnson publicly reprimanded William McChesney Martin for raising interest rates during the Vietnam War, while Richard Nixon exerted strong influence on Arthur Burns in the early 1970s, which economists believe led to rising inflation.
A study conducted by Thomas F. Cargill and Gerald P. O'Driscoll Jr. in 2013 argues that the independence of the Federal Reserve is more of a myth than a reality. The authors note that both political parties have intervened in its affairs when it was politically expedient.
Potential consequences for the markets and Bitcoin
The hypothetical dismissal of Powell would undoubtedly spark controversy; however, the markets might welcome such a decision if it cleared the way for easing monetary policy. The Federal Reserve, showing greater loyalty to the White House, could potentially lower interest rates faster, weaken the dollar, and increase demand for riskier assets, thereby creating a favorable environment for Bitcoin.
Beyond the short-term stimulus, such a move would underscore one of the key arguments for cryptocurrencies: fiat monetary systems are inherently politicized and subject to influence, whereas Bitcoin exists outside of that pressure. The combination of easing liquidity conditions and the strengthening narrative of 'hard money' could serve as a powerful catalyst for its further adoption.
Cryptocurrency Market Reaction
Despite potentially favorable prospects, the change in leadership at the Federal Reserve is still perceived by the market as unlikely. The reaction to Trump's decision regarding Lisa Cook reflects a general opinion that these statements are largely rhetorical in nature. Bitcoin practically did not react to the news, showing a slight increase of 0.3% immediately after publication. According to CoinDesk data, the largest digital asset continues to decline, losing 2.6% throughout the day.
The CoinDesk 20 Index, which tracks the performance of the largest crypto assets, is trading below the psychological mark of 4000 points, having fallen by 5.3% by mid-day Hong Kong time. This reflects a generally cautious sentiment in the digital asset market.
