This week, Donald Trump begins interviews with finalists for the position of Fed chairman. A decision that could shake up markets, including crypto. Between political tensions and economic issues, bitcoin finds itself at the heart of the storm. Who will be the winners and losers?
In brief
- Donald Trump begins interviews this week with finalists to replace Jerome Powell at the Fed.
- The tensions between Trump and Powell portend a future president of the Fed that is either docile or in open conflict, with risks of increased politicization of the institution.
- The decision of the next Fed president will directly impact bitcoin and could trigger extreme volatility in the crypto market.
Donald Trump launches hearings with finalists for the Fed
Donald Trump is scheduled to meet with the finalists for the presidency of the Fed this week. After months of speculation, names are circulating, and markets are already betting on their favorites. Kevin Hassett, director of the National Economic Council, comes in first with a 73% chance according to prediction platforms. Close to Trump, he embodies an accommodating monetary policy, aligned with the president's wishes: low interest rates to stimulate the economy.
Kevin Warsh, former Fed governor, follows with a 13% chance. Its profile, halfway between independence and political alignment, could appeal to those who fear a Fed that is too submissive to the executive. Christopher Waller, current governor, is only given 6%, but his experience could work in his favor. Finally, Michelle Bowman and Rick Rieder, although less mentioned, remain in the race. Their nomination would surprise the markets, but Trump likes dramatic events.
The issue is clear: Donald Trump wants a successor to Jerome Powell capable of reducing rates quickly. A decision that will have repercussions well beyond Wall Street, particularly on cryptos, which are sensitive to changes in monetary policy.
Fed: Does Trump want a puppet or an adversary?
Jerome Powell has often been the target of harsh criticism from Donald Trump. “ I would like to fire him “, ” This clown »: the insults flew, illustrating a more than tense relationship. Powell, accused of slowing growth by keeping rates too high, embodies for Trump everything a Fed president should not be: independent, sometimes at odds with the White House. Reason why Trump would not want to reappoint him to the post, in addition to the fact of having been appointed by the former President of the United States, Joe Biden.
The question arises: will Trump look for a docile ally to replace Powell, or a more independent profile, at the risk of reproducing the same conflicts? Market favorite Kevin Hassett appears to fit the first scenario. His alignment with Trump's positions could ease tensions, but at the cost of a Fed perceived as politicized. Conversely, a candidate like Kevin Warsh, although less likely, could embody a form of continuity with Powell, with the risks of friction that this implies.
Who will foot the bill in the Trump vs. Fed war?
Donald Trump's nomination of the next Fed president does not only concern traditional markets. The crypto ecosystem, and in particular bitcoin, will be directly impacted. The Fed's announcements, and Trump's reactions, have always had an immediate effect on cryptocurrencies. An appointment perceived as too political could trigger increased volatility, with sharp and unpredictable price movements.
If the Fed opts for a rate cut in December as Trump wishes, BTC could benefit. A weakened dollar and increased appetite for non-traditional assets could push investors into crypto. Conversely, a divided or independent Fed could put downward pressure on markets. Investors, fearing instability, could therefore turn to safer assets.
The appointment of the next president of the Fed by Donald Trump is a major event, with consequences well beyond monetary policy. For crypto, and especially bitcoin, this is a time of risk and opportunity. Between a complacent Hassett and an independent Warsh, there are multiple scenarios for Jerome Powell's successor. And you, do you think Trump will opt for a docile ally, or a more independent profile?
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