Economist Alex Krüger noted that Bitcoin investors have not yet accounted for the possibility of a more dovish Federal Reserve, a shift that will depend largely on whom U.S. President Donald Trump chooses to replace current Fed Chair Jerome Powell, whose term expires in May 2026.
Impact of Interest Rate Policy
Markets currently anticipate the Fed’s first rate cut of the year on September 17. According to Krüger, a more accommodative approach from Powell’s successor could create a favorable environment that supports Bitcoin’s upward momentum. He emphasized that this dynamic will only begin to be priced in once President Trump officially announces his nominee.
According to CNBC, the Trump administration is considering 11 potential candidates, including David Zervos (Chief Market Strategist at Jefferies), Rick Rieder (Global Chief Investment Officer of Fixed Income at BlackRock), and former Fed Governor Larry Lindsey. Some reports suggest the shortlist has been narrowed to three or four names, and an announcement could come sooner than expected.
Strained Relationship Between Trump and Powell
Since taking office, President Trump and Fed Chair Jerome Powell have frequently clashed, particularly over the pace and scope of interest rate cuts. In April, Trump stated: “Powell’s termination cannot come fast enough.” Several lawmakers, including Senator Rick Scott, have also voiced support for new leadership at the Fed.
According to the CME FedWatch Tool, nearly 84% of market participants expect a rate cut in September. Meanwhile, David Duong, Global Head of Research at Coinbase Institutional, highlighted that a significant amount of retail capital remains on the sidelines in money market funds, and that a shift toward looser monetary policy could unlock greater retail participation, especially in Bitcoin.
