Trump-driven debate over Fed independence… could it weigh on Bitcoin?

Markets focus on the next Fed chair pick

Kevin Hassett, seen as “pro-Trump,” emerges as a leading contender

“If Fed independence is undermined, rates could rise”

“A factor adding downside pressure on Bitcoin”

With US President Donald Trump saying he will announce the next chair of the Federal Reserve (Fed) “within weeks,” financial markets are turning their attention to the Fed selection process. Depending on the outcome, expectations are growing that volatility could increase across the rate path, the dollar’s direction, and risk assets more broadly.

In the digital-asset (crypto) market as well, attention is focused on who becomes the next Fed chair and what that could mean for Bitcoin prices. Typically, a pro-Trump appointment is viewed as boosting expectations for easier monetary policy, but as the debate over Fed independence overlaps, a growing view is that it is hard to see it as an unambiguous positive.

“A смена of Fed chair isn’t necessarily a straightforward positive for Bitcoin”

Current names floated as candidates for the next Fed chair include Kevin Hassett, Director of the White House National Economic Council (NEC); former Fed governor Kevin Warsh; and Fed Governor Christopher Waller. Among them, Hassett—widely seen as the front-runner—has repeatedly argued that the Fed should have started cutting rates earlier.

As President Trump has publicly criticized the high-rate stance, markets are assessing that if a pro-Trump figure leads the Fed, expectations for “aggressive rate cuts” could come back into focus. The crypto industry is also viewing Hassett’s appointment as a positive, on the logic that expectations of rate cuts and greater liquidity could be supportive for risk assets such as Bitcoin (BTC).

However, Wall Street is raising caution that it is “hard to see it as purely positive.” The Financial Times (FT) reported that “as the Hassett front-runner narrative spreads, Wall Street investors are more worried about the risk of eroding Fed independence than about rate-cut expectations.” The concern is that if political pressure is reflected in Fed policy, market rates could become more unstable, hurting global financial markets.

Reuters also noted that if the debate over Fed independence intensifies, investors may demand a higher risk premium for US assets such as Treasuries. In that case, even if the policy rate falls, long-term yields may not decline easily—or could even rise.

Powell investigation controversy… “If Fed independence wavers, rates rise too”

Uncertainty surrounding the Fed has grown further due to a recent controversy over an “investigation” targeting Fed Chair Jerome Powell. Powell said, regarding the Trump administration’s threat of criminal charges, that he has conducted monetary policy based on standards he judged to serve the public interest—not the president’s preferences.

Fed officials including New York Fed President John Williams have voiced support for Powell in succession, expressing concern about any erosion of Fed independence. Jamie Dimon, CEO of JPMorgan Chase, also warned that “if political pressure is applied to the Fed, inflation and interest rates could rise.”

There is also speculation that the selection timeline itself could be delayed. According to Reuters, Republican leaders in the US Senate raised concerns that the Powell-related investigation could disrupt the confirmation process for the next Fed chair nominee. In fact, Republican Sen. Thom Tillis has said he “will not agree to Fed confirmations until the Powell investigation issue is resolved.”

“If real rates rise, Bitcoin faces headwinds”

Against this backdrop, Bitcoin—often viewed as a risk asset—could face correction pressure.

Kim Byung-joon, a researcher at DeSpread, said that “if the growth-first stance is strengthened, long-term inflation expectations could be stirred,” adding that “if the bond term premium widens, nominal and real rates could rise together.”

He explained that “when real rates rise, the opportunity cost of Bitcoin, which has no interest income, increases,” and that “as Bitcoin is currently seen as a high-beta risk asset rather than a safe haven, it could face correction pressure.” He added that “if a correction starts as a result, forced liquidations could occur in a chain reaction, amplifying short-term downside pressure.”

On the other hand, there is also a view that the more controversy grows over political interference in monetary policy, the more Bitcoin could be reappraised. Analysts at BitUnix said that “when questions are raised about trust in the dollar and central bank independence, decentralized assets can receive a narrative-driven premium.”