Bitcoin News Today: Trump's Fed Gambit Sparks Legal Storm and Market Panic

President Donald Trump has moved to remove Federal Reserve Governor Lisa Cook from her post, marking the first time in the 111-year history of the central bank that a sitting governor has been fired by a U.S. president. In a letter posted on his social media platform, Trump cited allegations that Cook made false statements on mortgage agreements, claiming he had the constitutional authority to remove her for cause [1]. Cook has contested the claim, asserting that Trump lacks the legal standing to terminate her and vowing to continue her duties on the Fed’s board [2].

Cook’s lawyer, Abbe David Lowell, emphasized that the Federal Reserve is an independent institution and that any attempt to remove a member without due process is an unlawful action. “We will take whatever actions are needed to prevent [Trump's] attempted illegal action,” Lowell stated [1]. The move has sparked legal uncertainties, as the Fed’s independence from political interference is enshrined in federal law. Legal experts suggest that Trump will need to justify his decision in court to demonstrate sufficient grounds for removal, a process that could result in a protracted legal battle [2].

The controversy over Cook’s removal has intensified Trump’s ongoing conflict with the Federal Reserve, particularly with Chair Jerome Powell. Trump has consistently criticized Powell for maintaining high interest rates and has threatened to remove him from his position. The Fed, however, has maintained a data-driven approach, with Powell recently signaling the possibility of a rate cut in September following his speech at the Jackson Hole symposium [1]. This divergence in policy outlook between the White House and the Fed has raised concerns among global central bankers about the potential erosion of the Fed’s independence and its broader implications for monetary policy worldwide [5].

Meanwhile, the cryptocurrency market has shown signs of volatility in the wake of Trump’s announcement. Bitcoin, the world’s largest cryptocurrency by market capitalization, experienced a sudden price drop in a flash crash that erased $4,000 from its value within minutes. Analysts attributed the decline to a large holder, or “whale,” selling 24,000 BTC worth over $2 billion on the Hyperunite platform [4]. The sell-off impacted the broader crypto market, with the combined value of cryptocurrencies plummeting by approximately $100 billion in 24 hours [4]. The market’s reaction highlights the sensitivity of crypto assets to macroeconomic and political developments, particularly those involving the U.S. dollar and central bank policy.

Investors are also closely watching the potential consequences of Trump’s push to reshape the Federal Reserve’s leadership. If successful, the removal of Cook could create a vacancy on the Fed’s seven-member board, increasing the likelihood of Trump appointees gaining a majority. This scenario has drawn criticism from lawmakers, including Senate Banking Committee Chair Elizabeth Warren, who condemned the move as an authoritarian power grab violating the Federal Reserve Act [2]. The outcome of the dispute could influence not only U.S. monetary policy but also set a precedent for how other governments might approach their own central banks [5].

Global central bankers have expressed concerns that Trump’s actions could embolden populist leaders worldwide to assert greater control over independent monetary institutions. The European Central Bank and the Bank of Japan have both faced political pressures in the past to align their policies with national economic priorities, and the U.S. scenario could encourage similar moves elsewhere [5]. As the Fed’s next monetary policy meeting approaches on September 16 and 17, the uncertainty surrounding its independence and leadership remains a critical factor in shaping both short-term market expectations and long-term economic stability.

Source:

[1] Trump orders removal of Federal Reserve governor Lisa ... (https://www.bbc.com/news/articles/cx275n8gx0ro)

[2] Trump seeks to fire Fed governor Lisa Cook (https://www.npr.org/2025/08/25/nx-s1-5517335/trump-federal-reserve-governor-lisa-cook)

[3] Trump says he has fired Fed governor Lisa Cook. She ... (https://www.cnn.com/2025/08/25/business/trump-fire-fed-governor)

[4] Bitcoin Price 'Flash Crash' Panic Suddenly Wipes $100 ... (https://www.forbes.com/sites/digital-assets/2025/08/25/bitcoin-price-flash-crash-panic-suddenly-wipes-100-billion-from-crypto-market/)

[5] World's central bankers fear being caught in Fed's storm (https://www.reuters.com/business/finance/worlds-central-bankers-fear-being-caught-feds-storm-2025-08-25/)