US President Donald Trump has reignited discussions about replacing Federal Reserve (Fed) Chair Jerome Powell. This has caused ripples in traditional and crypto markets, with Bitcoin preparing to recover to $105,000.
These effects extend beyond monetary policy to Bitcoin, altcoins, and global macro risk sentiment.
Trump's Phantom Fed Chair Plan Shakes Markets
On June 6th, Trump announced that the next Fed Chair candidate "will be coming out very soon". Powell's term officially ends in May 2026.
This move represents a political earthquake in monetary policy, with Trump preparing a "phantom" Fed Chair candidate.
BREAKING: President Trump says his pick for the next Fed Chair is "coming out very soon."
Fed Chair Powell's term does not end until May 2026, but Trump is preparing to announce a replacement.
A "phantom" Fed Chair is coming.
— The Kobeissi Letter (@KobeissiLetter) June 6, 2025
Two months ago, when Trump first proposed removing Powell, the US Dollar Index (DXY) plummeted and Bitcoin surged. According to BeInCrypto, Bitcoin strongly rebounded as the market reflected expectations of looser monetary policy and declining Fed independence.
When Trump reversed his stance in late April, Bitcoin experienced a brief correction, demonstrating how closely crypto assets are tied to Fed credibility and financial policy.
Reuters reported that Trump told reporters in the Oval Office on Tuesday, "I have no intention of firing him... I wish he was a little more aggressive about his ideas of lowering rates."
With Powell replacement talks back on the table, Bitcoin is showing volatility again.
"This could significantly shake the markets. It could trigger a crypto bull run or cause a major downturn," said Rananjay Singh, founder of TodayCrypto.
Can Trump Fire Powell?
Legally, Trump cannot directly remove Powell from the Fed Chair position. The Federal Reserve Act allows removal only for "cause", historically meaning ethical violations or serious misconduct.
However, Trump can nominate Powell's successor before the 2026 deadline, a strategy proposed by Scott Bessent of Key Square Capital.
John Harold explained, "...the candidate will need to wait to chair the powerful Federal Open Market Committee that sets the nation's most critical interest rates. Their guidance, predictions, and potential criticism of Fed actions will significantly impact financial markets."
Bessent, who is also the US Treasury Secretary, is reportedly reviewing whether Trump can remove the Fed Chair.
— matthew sigel, recovering CFA (@matthew_sigel) May 19, 2025
Even with legal loopholes, some argue that removing him without cause would create legal and market chaos.
New Fed Chair's Impact on Bitcoin and Altcoins
Standard Chartered's Digital Assets Research Head Jeff Kendrick recently told BeInCrypto that Bitcoin is no longer a hedge against inflation, but rather a hedge against traditional finance (TradFi) and financial risks.
"The threat to remove Fed Chair Jerome Powell represents a financial risk. Therefore, hedging begins," Kendrick told BeInCrypto.
As monetary uncertainty increases, Bitcoin is increasingly seen as a decentralized alternative to fiat currency systems, especially during political interference.
Trump wrote on Truth Social, "If the Fed is 'too late' in cutting rates, we will significantly lower short and long-term rates for maturing debt. Effectively no inflation (anymore), but if it returns again, raise 'rates' to counter. Very simple!!! He is causing huge costs to our country. Borrowing costs should be much lower!!!"
Trump feels the US economy would improve without Powell, a sentiment emerging amid increasing debt. In this context, experts suggest Bitcoin as a lifeboat, with the pioneering cryptocurrency aiming to recover the $105,000 threshold.
Meanwhile, the impact extends beyond Bitcoin. With quantitative tightening (QT) and rate cut expectations lowered in 2025, struggling altcoins might finally receive signals for a rally.
"This is the most important news for altcoin holders. The main reason for altseason delay is the QT program and minimal rate cuts. But change is coming soon... The new Fed Chair will certainly meet [Trump's] demands. Altseason is approaching." – Analyst Cas Abbe wrote.
The Federal Reserve chairman associated with Trump will support aggressive interest rate cuts, ease financial conditions, and enable liquidity that will promote a cryptocurrency bull market. However, potential downside risks remain.
"That day will be a black swan event worldwide." – Popular account World of Finance warned.
This movement could bring a new bull market or cause a systemic shock.
Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
