Tensions between Donald Trump and Federal Reserve Chairman Jerome Powell are escalating into an open conflict. At the center of it all are the financial markets—especially cryptocurrencies—that could be significantly impacted by any further developments.

Political Pressure and a Shadow War Over Rates

In recent weeks, speculation has grown that Trump may attempt to remove Powell—or at least weaken him through the appointment of a "shadow Fed chair." This strategy would allow Trump to push for interest rate cuts even before Powell's official term ends, potentially reshaping the outlook for the U.S. dollar and risk assets like Bitcoin.

This comes at a time when markets are eagerly awaiting monetary easing. According to CME’s FedWatch tool, traders currently expect two rate cuts by the end of the year.

Jim Bianco, president of Bianco Research, emphasized that it’s not just about Powell, but about who comes next. A Fed chair appointed by Trump could dramatically change U.S. monetary policy and trigger a surge in risk-on assets, including crypto.

The president cannot dismiss the Fed chair for political disagreements. According to the Federal Reserve Act and the 1935 Supreme Court ruling in Humphrey’s Executor v. United States, the Fed chair can only be removed for “cause,” not for differing policy views.

That means Trump cannot simply fire Powell—but that doesn’t mean he can’t make Powell’s job harder. He can escalate public criticism, pressure Congress, hold hostile hearings, and politically obstruct the Fed’s operations. This strategy is already in motion: Congresswoman Anna Paulina Luna, a Trump ally, recently filed a criminal complaint against Powell over allegedly misleading Congress about the cost of renovating the Fed’s headquarters.

Crypto in the Crossfire

Trump’s rhetoric and the potential leadership shakeup at the Fed are fueling market uncertainty, which increases crypto volatility. In the short term, a weaker dollar and expectations of rate cuts could support crypto prices—as a kind of “chaos hedge.”

But in the long term, the situation is more complex. If political interference destabilizes the U.S. financial system, it could undermine trust in both the dollar and the broader infrastructure that crypto largely depends on.

Whatever happens next, one thing is clear: the Trump–Powell relationship will remain one of the key forces shaping crypto markets in 2025.


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