Recently, a 'firing storm' surrounding Federal Reserve Chair Powell has continued to brew in US politics, becoming the focus of global financial markets. The game between the Trump administration and the Federal Reserve not only affects traditional markets but also introduces potential variables in the cryptocurrency market. How will this power play impact the crypto space? We provide an in-depth analysis for you.
Behind Trump's 'Firing Gate': Policy Differences and Political Games
According to several authoritative media reports, President Trump recently mentioned the possibility of firing Federal Reserve Chair Powell in a closed-door meeting and showed a draft of the dismissal letter. Although Trump later publicly denied immediate firing plans, calling it 'very unlikely' and 'unless there is fraud,' this news still triggered significant market volatility.
Core Contradiction: Interest Rate Cut Pace and Independence Struggle
Trump's dissatisfaction with Powell mainly focuses on two points:
Slow Rate Cuts: Trump has repeatedly criticized the Federal Reserve's rate hike cycle for dragging down economic growth and hopes to stimulate the stock market and economic data through low interest rates to pave the way for the 2026 election.
Independence Controversy: Powell insists on the principle of 'independent operation' of the Federal Reserve, refusing to cater to the White House in policy, which has triggered strong dissatisfaction from Trump's team.
Legal and Political Dual Constraints
According to US (Federal Reserve Act) and 1935 Supreme Court precedent, the president can only fire Federal Reserve board members for 'just cause,' and policy differences do not constitute legal grounds. Moreover, Powell's term as chair lasts until May 2026, and his 14-year term as a Federal Reserve board member continues until 2028. Even if removed from the chair position, he may still be re-elected as chair through the Federal Open Market Committee.
The Democratic Party generally opposes the firing, believing it harms the independence of the Federal Reserve; there are also divisions within the Republican Party, with some lawmakers warning that this move could trigger a constitutional crisis. There is a clear division within the White House, with core aides like Treasury Secretary Bessenette opposing the risky firing, fearing it could undermine 'the cornerstone of the American financial system.'
Crypto Market: Short-term Volatility and Long-term Logic
Short-term Impact: Market sentiment dominates
Firing rumors have previously triggered short-term declines in the stock market, depreciation of the dollar, and rising Treasury yields. As a risk asset, the crypto market may experience short-term volatility influenced by changes in US dollar liquidity and market sentiment. For example:
Bitcoin: If a firing triggers market panic, Bitcoin may briefly rise due to safe-haven demand; however, if US dollar credit is compromised, it may face long-term pressure.
Altcoins: Highly volatile assets may amplify market sentiment, leading to sharp fluctuations.
Long-term Trend: Federal Reserve Policy and Global Economic Data
The core logic of the crypto market still depends on Federal Reserve policy and global economic data:
Interest Rate Cut Expectations: If the Federal Reserve turns to rate cuts due to economic data, liquidity easing may benefit the crypto market.
US Dollar Credit: If the independence of the Federal Reserve is compromised, the status of the dollar as a global reserve currency may be impacted, potentially driving cryptocurrencies as a 'digital gold' safe haven.
Potential Successor Impact
If Trump nominates a new chair, it could change the direction of Federal Reserve policy. Popular candidates include:
Kevin Hassett: Supports interest rate cuts, with a clear policy inclination.
Kevin Warsh: A hawkish representative, emphasizes controlling inflation.
Scott Bessenette: Market-oriented style, advocates flexible interest rates.
Different candidates' policy inclinations may indirectly affect the crypto market by influencing US dollar liquidity.
How will the crypto circle respond? Rationally view the power struggle.
Focus on Core Data: Federal Reserve policy, inflation data, and economic indicators remain key factors dominating the crypto market, and one must avoid being overly disturbed by short-term political news.
Diversify Risk: When market volatility intensifies, allocate assets reasonably to avoid single positions.
Long-term Perspective: The 'digital gold' attribute and decentralized characteristics of the crypto market may show unique value during fluctuations in US dollar credit.
Blindly going solo will never bring opportunities; why not follow the leader? I will guide you to explore tenfold potential coins! Top-tier first-level resources!
$ETH
$BTC
