The global financial markets are on edge as Donald Trump intensifies his criticism of the Federal Reserve (Fed) and its chair, Jerome Powell. With speculation mounting that Trump may attempt to “take over the Fed,” analysts warn that such a move could reshape monetary policy, disrupt global markets, and trigger a serious price shock for Bitcoin and crypto.
Trump vs. The Fed: A Long-Running Battle
Tensions between Trump and the Fed are not new. During his first term, Trump frequently clashed with Powell over interest rate hikes, accusing him of undermining economic growth.
Larry Kudlow, Trump’s former top White House adviser, recently told the New York Post that:
“President Trump’s going to take the Fed over, as he should.”
This remark has fueled speculation that Trump may push for greater political control over the Fed if he secures a second term. Such a move would challenge the traditional independence of the Federal Reserve, a cornerstone of U.S. monetary stability.
Inflation, Interest Rates, and Market Volatility
The row escalated after the Fed’s controversial decisions in recent years:
- Powell initially labeled post-pandemic inflation as “transitory,” delaying action on rising prices.
- In September 2024, the Fed shocked markets with a 50 basis point rate hike, which some viewed as politically motivated.
- Earlier this year, Trump floated the idea of removing Powell before his term expires in 2026, unsettling investors further.
Markets fear that if Trump directly intervenes in the Fed’s leadership, it could erode investor confidence, push bond yields higher, and fuel volatility across equities, gold, and cryptocurrencies.
Bitcoin and Crypto Brace for Impact
The Bitcoin price recently hit an all-time high as investors sought hedges against inflation and political instability. The combined crypto market has now surpassed $4 trillion, supported by record inflows into spot Bitcoin and Ether ETFs.
However, a Trump-led Fed shakeup could deliver mixed consequences for crypto:
- Bullish case: Reduced trust in the Fed may push more investors toward decentralized assets like Bitcoin and Ethereum.
- Bearish case: Sudden monetary policy shifts could create short-term liquidity shocks, dragging down both stocks and digital assets.
Institutional investors are now closely watching Fed policy signals and Trump’s next moves as potential catalysts for crypto’s volatility.
Political Moves Within the Fed
Beyond rhetoric, Trump has already made strategic appointments and attempted removals:
- Tried to oust Fed governor Lisa Cook.
- Installed Stephen Miran, a Council of Economic Advisers chair and known Bitcoin supporter, as a temporary Fed governor.
These actions highlight Trump’s strategy of embedding crypto-friendly policymakers inside the Fed while simultaneously undermining Powell’s authority.
Trump’s potential plan to “take over the Fed” is one of the most consequential risks looming over financial markets today. For Bitcoin and crypto, the outcome could be either a massive tailwind—as distrust in central banking grows—or a serious shock if liquidity tightens abruptly.
Either way, the stage is set for heightened market volatility, with investors bracing for one of the most pivotal chapters in the ongoing battle between politics, central banks, and the future of money.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.