This year, Donald Trump’s verbal attack on the Federal Reserve and its chairman, Jerome Powell, has taken the stock, cryptocurrency, and bitcoin markets by shock. Trump has now added a new, covert weapon to his arsenal.
As the crypto “floodgates are starting to open,” the price of bitcoin and gold both soared to an all-time high last month, bringing the total value of the cryptocurrency market to almost $4 trillion.
Now, as Tesla billionaire Elon Musk gives a harsh $37 trillion warning, a key Trump supporter predicts the president will “take the Fed over,” upending the global financial order and causing havoc for the bitcoin price, crypto, and stock markets.
A key Trump supporter and top White House advisor during the president’s first term, Larry Kudlow, told that “Trump was upset with Powell for raising [interest] rates without any justification.”
“Kind of a depressing story. In a way, it reads humorous—people shouting at one another—if it weren’t such a serious matter. Let’s face it, though: President Trump will, and should, take over the Fed.”
For years, Trump and the Fed have been at odds over charges of political bias, which started when Powell mislabeled post-Covid lockdown inflation as “transitory” and refrained from raising interest rates in response to price increases.
The fight was exacerbated when Powell startled markets with a 50 basis point inflation boost in September last year, which some saw as a gift to Trump’s Democratic Party election contender Kamala Harris.
Trump’s comments earlier this year that he may fire Powell before his term expires next year alarmed investors that worry about the political independence of the Federal Reserve. However, the cryptocurrency-powered Polymarket prediction platform’s probability of Trump “removing” Powell have decreased from a peak of 20% in July to about 5%.
Since that time, Trump has attempted to remove Fed Governor Lisa Cook and appointed Stephen Miran, a bitcoin admirer and chair of the Council of Economic Advisers (CEA), as a temporary Fed governor.
Investors seem to be ignoring the fact that President Trump is still interfering in the [Fed’s] business, endangering the Fed’s independence. According to emailed comments from David Morrison, senior market analyst at Trade Nation, this might turn out to be a far more significant problem.
It is generally anticipated that the Fed would lower interest rates this week in response to a sluggish labor market that has outweighed the possibility of inflationary price pressures.
Many of the more optimistic bitcoin investors and traders have forecast that when the Fed does start lowering interest rates, the price of bitcoin would increase more swiftly since this will stimulate cash to move through the economy more quickly.
The price of bitcoin and the whole cryptocurrency market have risen over the past week, with bitcoin up 5% as traders feel more confident due to the anticipated dovish Fed pivot.
