Bitcoin's Rally Gains Momentum as Trump-Powell Feud Undermines Dollar Stability

The escalating conflict between President Donald Trump and Federal Reserve Chair Jerome Powell has injected unprecedented volatility into global markets, with the U.S. dollar weakening as Bitcoin (BTC) surges to fresh highs. Analysts warn that Trump’s relentless criticism of the Fed’s monetary policy—and his threats to remove Powell—could erode confidence in the dollar’s long-term stability, fueling demand for alternative assets like Bitcoin.

The Trump-Powell Standoff: A Threat to Fed Independence

Trump’s April 2025 demands for Powell’s “termination” on Truth Social marked a historic escalation in the president’s public feud with the central bank. The president accused the Fed of being “TOO LATE AND WRONG” for resisting interest rate cuts, while Powell defended the Fed’s obligation to prevent inflation from becoming entrenched. This clash has reignited debates over the Fed’s independence, with legal experts noting that Trump’s push to override Supreme Court precedents—such as the rule barring presidents from firing independent agency heads without cause—could destabilize the central bank’s credibility.

Dollar Weakness and Bitcoin’s Bullish Turn

The market’s reaction to Trump’s rhetoric has been mixed, but Bitcoin has emerged as a clear beneficiary of the Fed’s political vulnerability. Historical data shows that Bitcoin often rises when traditional markets face uncertainty, particularly during periods of inflationary pressure or currency devaluation.

Since Trump’s April 2025 post, Bitcoin has climbed 15%, reaching $88,000 as the dollar index (DXY) fell 3%. This inverse correlation aligns with analysts’ warnings that political interference in Fed policy could weaken the dollar’s standing as a global reserve currency. “If markets perceive the Fed as compromised, inflation expectations will rise, and the dollar’s value will decline—creating fertile ground for Bitcoin’s rise,” said Francesco Bianchi of Johns Hopkins University.

Why Bitcoin, Not Gold?

While gold has traditionally been the go-to inflation hedge, Bitcoin’s rigid supply cap and decentralized nature make it uniquely positioned to capitalize on institutional distrust in fiat currencies. Unlike gold, Bitcoin cannot be manipulated by central banks or governments—a key selling point as Trump’s policies risk politicizing monetary decisions.

VanEck’s Matthew Sigel noted that Bitcoin’s trajectory now mirrors gold’s during periods of macroeconomic instability. “When confidence in institutions erodes, investors seek assets beyond political control. Bitcoin’s $140,000 price target by late 2025—predicted by Ferdinando Ametrano of CheckSig—is plausible if the Fed’s credibility continues to wane.”

Risks and Regulatory Crossroads

The path forward is not without hurdles. Bitcoin’s short-term volatility remains tied to broader market sentiment, as seen in its 10% drop earlier this year when Trump’s tariff policies exacerbated stagflation fears. Additionally, the White House’s upcoming crypto summit in March 2024 could either accelerate institutional adoption or introduce regulatory hurdles that test Bitcoin’s resilience.

Conclusion: A New Era of Decentralized Finance

The Trump-Powell feud has exposed systemic vulnerabilities in the U.S. financial framework, with Bitcoin emerging as a counterweight to fiat instability. With the dollar’s credibility at risk and inflation expectations rising, Bitcoin’s rise reflects a broader shift toward decentralized assets.

Key data points underscore this trend:
- Bitcoin’s 15% rally since April 2025 aligns with a 3% drop in the dollar index during the same period.
- Analysts predict Bitcoin could hit $140,000 by late 2025 if institutional capital flows increase, driven by European investors seeking inflation hedges.
- Historical parallels show Bitcoin outperforms equities during periods of Fed political interference, with a 200% return versus the S&P 500’s 20% decline during 2020–2022.

As the Fed’s independence faces its greatest test in decades, Bitcoin’s role as a “digital gold” is solidifying. For investors, the message is clear: in a world of political and monetary uncertainty, Bitcoin’s apolitical design may be the safest bet.