Trump's Pressure on Powell Fuels Bitcoin Surge to $120,000

Federal Reserve Chair Jerome Powell is under intense pressure from the White House and U.S. President Donald Trump, whose repeated attacks on Powell over interest rates have raised the possibility of a significant change in leadership at the Fed. The Trump administration is investigating the Fed’s $2.5 billion renovation project, which has led to questions about whether Powell may have misled Congress in his testimony regarding the renovation. This investigation could potentially be used as a reason for Trump to remove Powell from his position.

Trump has hinted at the possibility of removing Powell before his term ends next year, although the legal authority to do so is unclear. National Economic Council director Kevin Hassett has stated that the president's power to fire Powell is being looked into, and if there is cause, he does have the authority to do so. Former Fed governor Kevin Warsh, who is considered a front-runner to replace Powell, has suggested that the Fed has "lost its way" and that a "regime change" is necessary. The odds of Trump removing Powell on the crypto-powered PolyMarket prediction platform have increased in recent weeks, climbing from under 10% in June to over 20% this week.

The next Fed chair, appointed by Trump either this year or once Powell’s term ends in 2026, is widely expected to be supportive of lower interest rates. Bitcoin's price has repeatedly hit fresh all-time highs through 2025, challenging the notion that its historical 13-year run to 2022 was solely due to the global zero interest rate policy (ZIRP) that followed the 2008 financial crisis. Many bullish bitcoin traders and investors predict that the bitcoin price will climb at a faster rate if or when the Fed begins to lower interest rates, as this encourages cash to flow more quickly through the economy.

The Fed kept interest rates on hold last month after initiating a reduction cycle in September, which has been paused due to fears that Trump’s global trade tariffs could lead to a return of inflation. Critics have pointed to the pre-election reduction and post-election pause as evidence of political bias. Powell has stated that the expected increase in inflation as a result of Trump’s trade tariffs is a good reason to take a “wait-and-see” approach to adjusting interest rates, with the market almost certain that the Fed will hold rates steady again later this month.

In June, Trump renewed his attack on Powell as U.S. debt topped $37 trillion, branding Powell a “moron” and heavily criticizing Fed policy that he claims is costing the U.S. $1 trillion per year in interest payments. Trump suggested that he might have to change his mind about firing Powell, but regardless, Powell's term is set to end shortly.

Bitcoin's price has surged to unprecedented heights, reaching a new all-time high of over $120,000 against the U.S. dollar. This remarkable ascent coincides with a period of significant economic uncertainty, particularly as the Federal Reserve faces increasing pressure and scrutiny. The Fed, traditionally an independent entity, is now grappling with external influences that could alter its course of action. This situation has led to a "Fed nightmare" scenario, where the central bank's decisions are being closely watched and potentially influenced by external factors, including political pressures.

The surge in Bitcoin's value comes at a time when traditional financial markets are experiencing volatility due to various geopolitical and economic factors. The cryptocurrency's rise to over $120,000 marks a significant milestone, as it has been trading sideways for months before this sudden spike. This price movement has caught the attention of investors and analysts alike, who are trying to understand the underlying reasons for this sudden surge.

One possible explanation for Bitcoin's price increase is the growing interest in cryptocurrencies as a hedge against inflation and economic uncertainty. As traditional financial markets face challenges, investors are turning to Bitcoin as a store of value and a potential safe haven. The cryptocurrency's decentralized nature and limited supply make it an attractive option for those looking to protect their wealth in times of economic turmoil.

Another factor contributing to Bitcoin's price surge could be the increasing acceptance and adoption of cryptocurrencies by mainstream institutions. As more companies and investors recognize the potential of Bitcoin and other digital assets, the demand for these assets is likely to increase, driving up their prices. This trend is supported by the growing number of institutional investors entering the cryptocurrency market, as well as the development of new financial products and services that cater to this emerging asset class.

However, the Fed's actions and the broader economic environment remain critical factors that could impact Bitcoin's price in the coming months. The central bank's decisions on interest rates, monetary policy, and other economic measures will continue to influence the performance of traditional financial markets and, by extension, the cryptocurrency market. As the Fed navigates this challenging landscape, investors will be closely monitoring its actions and their potential impact on Bitcoin and other digital assets.