Bitcoin News Today: Trump's Early Fed Chair Pick Causes Market Volatility, Bitcoin Fluctuations

Donald Trump has announced his intention to disrupt the usual schedule by naming Jerome Powell’s successor as early as 11 months before the end of Powell’s term. This move is part of a broader strategy to drastically lower interest rates, which could have significant implications for global financial markets. The four leading candidates for the position are Christopher Waller, Kevin Walsh, Scott Bessent, and Kevin Hassett, each with distinct views on monetary policy that could shape the future of the economy and, notably, the cryptocurrency market.

Trump’s early announcement has already begun to influence market expectations. Each statement made by Trump on his social media platform causes immediate fluctuations in the odds of various candidates, allowing investors to anticipate future monetary policy directions several months in advance. This unprecedented situation has led to increased volatility in bond markets, the dollar, and risky assets like bitcoin.

Christopher Waller, a Fed governor since 2020, is currently the favorite to replace Powell. His advocacy for rate cuts despite tariff risks has already had a significant impact on the market, causing a 20 basis point drop in the 2-year Treasury yield in just 15 minutes. Waller’s monetary philosophy prioritizes growth and employment over temporary inflationary pressures, which could lead to lower interest rates and a weaker dollar—conditions that historically favor risky assets like bitcoin.

On the other hand, Kevin Walsh represents a more conservative stance. A former Fed governor and ex-Morgan Stanley banker, Walsh advocates for no interest rate cuts until inflation sustainably returns to the 2% target. This approach sharply contrasts with current market expectations and Trump’s wishes for lower rates. A Walsh appointment would likely trigger a sharp repricing of expectations, with high real interest rates and a strengthened dollar weighing heavily on digital gold, making it a worst-case scenario for crypto investors.

Scott Bessent, currently the Treasury Secretary, and Kevin Hassett, director of the National Economic Council, both support an aggressive liquidity strategy. Bessent favors the issuance of short-term Treasury bills to keep long-term rates artificially low, while Hassett believes there is no reason not to cut rates immediately. An appointment of either Bessent or Hassett would likely create an environment of massive liquidity, ideal conditions for a surge in risky assets, with bitcoin leading the way.

Bitcoin’s reaction to monetary policy expectations is particularly noteworthy. Negative real interest rates and dollar depreciation are traditionally its best catalysts, while a restrictive policy erodes its appeal compared to interest-bearing assets. The Waller/Bessent/Hassett scenario would likely propel bitcoin to new highs, creating an environment of cheap financing and abundant liquidity. Conversely, Walsh’s conservative views would strengthen competition from traditional gold and Treasury bonds against digital gold, potentially leading institutional investors to favor guaranteed yields over speculative assets.

The choice of the next Fed chair will have far-reaching implications beyond U.S. borders. This appointment will influence global monetary policies and redefine the balance between major currencies. European and Asian central banks will need to adjust their strategies accordingly, creating major arbitrage opportunities for savvy investors. The decision will not only shape the future of the U.S. economy but also have a profound impact on the global financial landscape, particularly for risky assets like bitcoin.