Would Powell’s Resignation Really Be a Bullish Catalyst for Crypto? Analyzing Trump’s Fed Feud
- The Fed Chair Showdown: Trump’s Pressure Campaign
- Why Crypto Enthusiasts Want Powell Gone
- The Hidden Risks of Political Interference
- The Euro-Dollar-Bitcoin Triangle
- Historical Precedents Worth Considering
- The Verdict: Short-Term Pain Before Potential Gain
- Q&A: Your Fed Drama Questions Answered
The crypto market is buzzing with speculation that Jerome Powell’s potential ousting by President Trump could send Bitcoin to new highs. While lower interest rates might weaken the dollar and boost BTC/USD, the short-term chaos could hurt broader financial stability. Here’s why the Fed chair drama is more nuanced than "bullish vs. bearish."
The Fed Chair Showdown: Trump’s Pressure Campaign
President Trump’s very public feud with Federal Reserve Chair Jerome Powell has escalated from Twitter insults to an in-person "inspection" of the Fed’s headquarters this week. The tension stems from Trump’s demand for aggressive rate cuts to stimulate the economy, while Powell remains cautious about reigniting inflation. Crypto traders are cheering for Powell’s removal, betting it would lead to dollar devaluation and Bitcoin rallies. But is this Optimism premature?
Why Crypto Enthusiasts Want Powell Gone
The logic seems straightforward:
- A Powell resignation could lead to a more dovish Fed chair
- Lower interest rates would weaken the dollar’s purchasing power
- Bitcoin often inversely correlates with dollar strength
As one BTCC analyst noted, "When the Fed cut rates by 50bps in March 2025, BTC jumped 12% in 48 hours while the DXY index dropped 2%." The market clearly reacts to monetary policy shifts.
The Hidden Risks of Political Interference
However, forcibly removing the Fed chair carries systemic risks:
| Short-Term Impact | Long-Term Consequences |
|---|---|
| Dollar volatility spikes | Erosion of Fed independence |
| Capital flight from USD assets | Global reserve currency doubts |
| Potential crypto sell-off (risk aversion) | Structural inflation risks |
Remember when Turkey’s Erdogan fired central bank governors in 2021? The lira collapsed 40% that year. While the US has deeper markets, the principle remains: politicized monetary policy rarely ends well.
The Euro-Dollar-Bitcoin Triangle
European crypto investors face an extra layer of complexity. The EUR/USD rate has swung from 0.98 to 0.85 this year alone - meaning Bitcoin’s dollar gains get diluted when converted to euros. As of July 2025:
- BTC/USD: -3.5% from ATH
- BTC/EUR: -9.2% from ATH
This divergence explains why American traders might celebrate dollar weakness while Europeans wait longer for record highs.
Historical Precedents Worth Considering
Fed leadership changes aren’t unprecedented, but context matters:
- 1978: President Carter replaced Fed Chair Miller with Volcker, triggering a recession but ultimately taming inflation
- 2018: Trump criticized Powell but didn’t remove him - markets stabilized after initial volatility
The current situation feels more like 1978’s stagflation worries than 2018’s growth environment. Proceed with caution.
The Verdict: Short-Term Pain Before Potential Gain
While Powell’s exit might eventually benefit crypto, the transition could be messy. As someone who traded through the 2020 Fed liquidity crisis, I’ve learned that institutional investors hate uncertainty more than they love cheap money. The smart play? Watch the DXY index and BTC futures open interest for clues about real-money positioning.
Q&A: Your Fed Drama Questions Answered
Can Trump actually fire Jerome Powell?
Technically no - Fed chairs serve fixed terms to maintain independence. However, presidents can apply political pressure (like public criticism or withholding reappointment).
Would a new Fed chair immediately cut rates?
Not necessarily. Even dovish policymakers must consider inflation data and market stability. The BTCC research team notes that since 1950, Fed chairs average 6 months before making major policy shifts.
How might gold react compared to Bitcoin?
Historically, Gold benefits from dollar weakness too but with lower volatility. The 60-day correlation between BTC and gold hit 0.78 in June 2025 - the highest since 2020.
