The ongoing conflict between #PowellVsTrump over Federal Reserve interest rate policies is having a notable impact on the cryptocurrency market:
Market Volatility and Uncertainty: Trump's public criticism of Powell and threats to remove him have injected uncertainty into traditional financial markets, which often translates into increased volatility in crypto markets. Investors respond to these political tensions with heightened risk appetite swings.
Bitcoin and Stablecoins Benefit: The distrust in fiat institutions fueled by Trump's attacks on the Fed tends to favor cryptocurrencies like Bitcoin, which are seen as a hedge against inflation and monetary policy uncertainty. Additionally, Trump’s hinted support for crypto-friendly regulation (e.g., the GENIUS Act) promotes confidence in U.S.-backed stablecoins and compliant exchanges, encouraging investment inflows.
Fed Rate Decisions Influence Crypto Prices: Powell’s cautious stance on interest rates, contrasted with Trump’s push for aggressive cuts, affects liquidity and market sentiment. Higher rates generally strengthen the dollar and reduce investment in speculative assets like crypto, causing price declines. Conversely, expectations of rate cuts or Fed instability can boost crypto prices as investors seek alternative assets.
Short-Term Gains Amid Political Drama: Bitcoin and other cryptocurrencies have shown price jumps during moments of heightened Trump-Powell tension, as seen when Bitcoin surged above $87,500 following Trump’s hints about Powell’s removal. This is partly due to a weakening U.S. dollar and increased speculative interest.
Risks of Fed Chair Removal: The potential termination of Powell could destabilize markets and shake investor confidence, causing short-term crypto volatility. While lower interest rates are bullish for crypto, politicizing the Fed could deter institutional investors who value regulatory stability.
In summary, the Trump-Powell clash creates a mixed but generally bullish environment for cryptocurrencies in the near term, driven by political uncertainty, potential regulatory support, and shifting monetary policy expectations. However, this also brings increased volatility and risk, with crypto prices sensitive to Fed decisions and geopolitical developments.
Sources
https://cryptorank.io/news/feed/d2071-trump-crypto-effect-internal-vs-external-war
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https://www.cnbc.com/2025/06/18/fed-rate-decision-june-2025-.html
