Trump's criticism of Powell triggers heightened panic in the crypto world: Three key impacts on the crypto world

Recently, Trump has frequently criticized Federal Reserve Chairman Powell, accusing him of "slow action" that could once again mess up interest rate cuts. This political game not only impacts traditional financial markets but also has far-reaching effects on the crypto world. Here are the three key points that investors in the crypto world need to pay attention to:

 

1. The independence of the Federal Reserve is challenged → Bitcoin's "hedging properties" are tested again

Trump threatened to fire Powell and even discussed installing a "shadow chairman" to intervene in monetary policy, raising concerns about the independence of the Federal Reserve in the market. History shows that the politicization of central banks often drives funds toward "decentralized" assets:

- Bitcoin experiences increased short-term volatility: In April, when Trump first hinted at firing Powell, BTC briefly soared to $93,000 but then fell back due to policy uncertainty.
- Long-term or strengthened BTC "digital gold" narrative: If the Federal Reserve becomes a political tool and the credit of fiat currency is damaged, Bitcoin's appeal as a censorship-resistant asset may increase.
- Institutional capital inflow accelerates: Some hedge funds have increased their holdings of BTC to hedge against the "central bank trust crisis". Bitwise report shows that related derivatives trading volume has surged by 30%.

Key question: Can Bitcoin truly break free from its correlation with the US stock market and become an independent safe-haven asset? Current data shows that BTC is still influenced by macro liquidity, but extreme political events may accelerate its "decoupling" process.

 

2. Interest rate cut expectations fluctuate → Liquidity game in the crypto market

The core purpose of Trump's pressure to lower interest rates is to stimulate the economy, but Powell insists on being "data-driven," leading to a tug-of-war between the two parties that causes market liquidity expectations to fluctuate.

- If interest rate cuts are implemented:
- Positive for risky assets: Cheap capital may drive up the prices of crypto assets like BTC and ETH, similar to the historical performance of BTC rising 40% during the 2024 interest rate cut cycle.
- Decrease in demand for stablecoins: Lower interest rates may weaken the yield attractiveness of stablecoins such as USDT.
- If the interest rate cut is delayed:
- Short-term selling pressure: After Powell's statement in April that he is "not in a hurry to cut interest rates," BTC dropped by 5% in a single day.
- Strong dollar suppresses coin prices: The Federal Reserve's maintenance of high interest rates may drive the dollar's appreciation, exacerbating capital outflows from the crypto market.

Latest news: CME FedWatch shows that market expectations for interest rate cuts in 2025 have been raised from 3 to 4 times, but Powell still emphasizes that "no action will be taken until inflation meets the target". The crypto world needs to be cautious of the severe volatility caused by discrepancies in expectations.

 

3. Trump's "Bitcoin Strategic Reserve" plan vs. Powell's opposition → Policy conflict ignites the market

Trump advocates for the establishment of a "national Bitcoin reserve", while Powell clearly opposes the Federal Reserve holding BTC. This contradiction could become the biggest variable in the future crypto world:

- If Trump pushes forward forcefully:
- Purchase BTC through the Exchange Stabilization Fund (ESF): bypassing the Federal Reserve, it may trigger a FOMO rally in the short term, but the legal risks are high.
- Congressional Legislative Support: Senator Cynthia Lummis has submitted a related bill, which, if passed, will be beneficial for BTC demand in the long term.
- Powell's stance is firm:
- After Powell rejected the BTC reserve proposal in December, BTC plummeted 5% in a single day, falling below 100,000 USD.
- If the Federal Reserve continues to resist, it may dampen institutional entry sentiment, but decentralized finance (DeFi) may gain more attention as a result.

On-chain signal: The Trump family's crypto project World Liberty quickly bought altcoins after Powell's speech, showing the secret link between political power and the crypto market.
Summary: How does the crypto world respond?

- Short-term traders: Pay attention to the immediate market reaction to the Federal Reserve's interest rate decisions and Trump's statements, especially beware of flash crashes triggered by "hawkish surprises" (such as a delay in interest rate cuts).
- Long-term holders: The politicization risk of the Federal Reserve may strengthen the "anti-censorship storage" value of BTC, but beware of regulatory uncertainty.
- Altcoin investors: Political interference in central banks may accelerate the "de-dollarization" narrative, which is favorable for cross-border payment tokens (such as XRP) and privacy coins.

Historical experience: After the Nixon shock, gold skyrocketed. Under similar logic, Bitcoin could become "the hard asset of the new era" - but the prerequisite is that it can truly shake off its short-term speculative nature. #NXPC Launchpool# #PPI数据公布# #稳定币立法#