What will happen to Crypto Assets if Trump takes over The Federal Reserve (FED)? Trump threatens to fire FED Chairman Powell!

Recently, the focus of the American political arena and financial markets has been on an unprecedented power struggle—President Trump has openly threatened to fire Federal Reserve Chairman Jerome Powell, citing his "refusal to cut interest rates, which hampers economic growth." This conflict over the autonomy of monetary policy not only challenges the Central Bank's 70-year tradition of independence but also provokes deep reflection on global financial stability and the direction of the crypto assets market: will the Federal Reserve potentially become a political tool, causing Bitcoin and other crypto assets to become new "safe havens," or will they fall into greater uncertainty? Powell was nominated as the Chairman of the Federal Reserve during Trump's term in 2018, and their relationship was harmonious at that time. However, as the Federal Reserve continued to raise interest rates from 2018 to 2019 to curb inflation, Trump began to frequently criticize Powell's policies as "hindering economic growth." He publicly stated: "The Federal Reserve is my biggest threat" and "They are raising interest rates too quickly and lowering them too slowly." This contradiction further intensified after the COVID-19 pandemic in 2020. Although Powell adopted unprecedented monetary policy (including zero interest rates and unlimited QE), Trump still accused him of failing to effectively stimulate the economy. As 2024 approached, with Trump elected president of the United States again, the conflict between the two reached its peak. Trump advocates for "radical interest rate cuts to stimulate the economy," believing that the current benchmark interest rate is too high, leading to increased financing costs for businesses and pressure on the stock market. In a public speech on April 17, he stated bluntly: "Powell's economic policies are disastrous, and he should cut interest rates immediately, or the U.S. economy will fall into recession." Meanwhile, Powell insists on the Federal Reserve's policy autonomy, emphasizing that interest rate decisions must be based on inflation data and the performance of the job market, refusing to yield to political pressure. Behind this divergence lies a confrontation of two economic philosophies: Trump adheres to "short-term growth first," attempting to maintain stock market prosperity and economic hegemony through low interest rates; Powell, on the other hand, follows a "inflation targeting" approach, believing that cutting interest rates too early could trigger the risk of stagflation. At the same time, following the announcement of the "reciprocal tariff" policy, global financial markets have been tumultuous, with the US stock market continuing to decline amidst widespread criticism, further exacerbating Trump's anxiety and prompting him to resort to the extreme measure of "threatening to fire". Recently, Trump publicly stated: "If I had a knowledgeable Federal Reserve Chairman, interest rates would have been cut long ago! I am very dissatisfied with him, and if I want him to leave, he will leave very quickly, believe me."

In the face of the president's provocation, Powell displayed a rare tough attitude. He subsequently responded, stating: "According to U.S. law, the president does not have the authority to remove the Chairman of the Federal Reserve due to policy disagreements. Even if asked to resign, I will never leave, and I will serve my term until May 2026." According to the Federal Reserve Act, the term of the Chairman of the Federal Reserve is fixed at four years and can only be removed through impeachment by Congress or for serious misconduct. There is currently no precedent showing that the president can bypass legal procedures to forcibly replace the Chairman of the Federal Reserve. However, the Trump administration is trying to break through this restriction through judicial means—its legal team cites a case being heard by the Supreme Court involving Trump’s attempt to remove two Democratic members of the Federal Labor Relations Authority, with the core dispute being whether the "executive branch has the authority to intervene in personnel appointments of autonomous agencies." If the Supreme Court rules that the president has the authority to replace officials of autonomous agencies who do not cooperate with policies, Powell's position may face a direct threat. If Trump really forces Powell to resign, it will overturn the tradition of Central Bank independence established by the 1951 Federal Reserve-Treasury Accord. Historical experience shows that the politicization of central banks often leads to rampant inflation: during the "Great Inflation" period of the 1970s in the United States, the Nixon administration's intervention with the Federal Reserve caused inflation rates to soar to 13%. Currently, the market is worried that if Trump takes over the Federal Reserve, it may force the Central Bank to implement "unlimited quantitative easing," repeating the collapse of the Turkish lira. The autonomy of the Federal Reserve is the core pillar of the US dollar as the global reserve currency. Once the Trump administration successfully intervenes in interest rate policy, it will send a signal to the market that "US monetary policy is politically controlled," leading to a loss of confidence among international investors in US dollar assets. On April 18, the dollar index fell by 0.8% after Trump made remarks about dismissals, and the yield on 10-year US Treasuries widened by 50 basis points, reaching a new high since the pandemic began in 2020. The deeper impact is that the global de-dollarization process may accelerate. Emerging market countries such as Russia and India have already reduced their use of the dollar in cross-border trade. If the Federal Reserve loses its autonomy, these countries will have even more reason to turn to other reserve currencies or decentralized assets. Historical experience shows that whenever the credit of sovereign currencies collapses, gold and Bitcoin tend to experience explosive growth. Data shows that the spot price of gold rose by 6.5% during the event's fermentation, breaking through $3355 per ounce, while the price of Bitcoin rebounded from over $70,000 to over $80,000, indicating that the market is viewing physical gold and digital gold as alternative options for "depoliticized assets."

In this regard, cryptocurrency analysts generally believe that the loss of autonomy by the Federal Reserve will amplify Bitcoin's advantage of "resistance to political interference." When the government attempts to manipulate the money supply, Bitcoin's fixed inflation rate (about 1.7% per year) and decentralized issuance mechanism become scarce attributes. This is not speculation, but a hedge against a crisis of trust in currency. More importantly, the "Strategic Bitcoin Reserve" launched by the Trump administration in 2024 (which incorporates 200,000 seized bitcoins into the national reserve) objectively grants Bitcoin the role of a "quasi-official safe-haven asset," providing it with additional endorsement amidst policy turmoil. In addition, Trump's intervention with The Federal Reserve may indirectly encourage other countries to accelerate the establishment of "Crypto Assets safe havens." In April 2025, Hong Kong has allowed Ethereum spot ETFs to incorporate staking functions, and Canada’s Solana spot ETF has also achieved "compliant staking interest." These cases show that during turmoil in the traditional financial system, regulators are more inclined to diversify risks through Crypto Asset innovations. If the politicalization of the Central Bank in the United States leads to capital outflows, jurisdictions friendly to regulation such as Singapore and Switzerland may accommodate more Crypto Assets, reshaping the global digital financial landscape. However, despite the long-term logic being favorable, the crypto assets market still faces short-term selling pressure. During the "Silicon Valley Bank crisis" in 2024, Bitcoin was sold off due to a stock market crash, leading to a halving of its price. Currently, the 30-day correlation coefficient between US stocks and crypto assets remains as high as 0.65. If Trump's threats trigger a stock market crash, Bitcoin may be forced to "go down with the ship." On April 19, during intraday trading, Bitcoin briefly fell below $80,000 along with the S&P 500 index, indicating that the market's dependence on traditional finance has not yet been completely severed.

Overall, the conflict between Trump and Powell is essentially a fierce collision between the "political cycle" and the "economic cycle". As the traditional Central Bank system faces a crisis of trust, the rise of Crypto Assets is no longer merely a technological revolution, but a systemic change regarding the distribution of monetary power. If the autonomy of The Federal Reserve (FED) is maintained, Crypto Assets may continue to exist as "supplementary assets"; however, if political intervention undermines the traditional autonomy of the Central Bank, decentralized currencies such as Bitcoin may encounter a "historic opportunity"—becoming a "digital shield" for global capital against the abuse of power. The outcome of this game is still unknown, but it has revealed a key fact: in an era of declining globalization and rising geopolitical tensions, the legitimacy of currency is no longer solely supported by national credit; a technology-enabled decentralized trust mechanism is reshaping the rules of value storage. Regardless of the final result, the "Federal Reserve crisis" of 2025 will become an important footnote for the mainstream adoption of crypto assets - it proves that when institutional trust fractures, the trust systems constructed by technology will eventually gain a renewed examination by the market. Perhaps the true value of Crypto Assets lies not in replacing traditional finance, but in forcing the latter to return to rationality: when monetary policy is no longer swayed by short-term political interests, and when the autonomy of the Central Bank is firmly guaranteed by law, whether it is the US Dollar or Bitcoin, can truly become the "good coin" that serves economic development. And this is the ultimate insight that the current storm gives us. #Trump Pressures Powell