Bitcoin Surges 2% to $87,200 as Trump's Fed Threat Weakens Dollar

Bitcoin (BTC) led a surge in major cryptocurrencies early Monday, as the U.S. dollar index plummeted to a three-year low. This decline was sparked by reports that President Donald Trump was exploring ways to remove Federal Reserve Chairman Jerome Powell, raising concerns about the central bank's independence. BTC rose over 2% to $87,200, marking a bullish resolution to its recent consolidation phase. Other major cryptocurrencies, including XRP, Ethereum's ether (ETH), and Cardano's ADA, also saw gains of over 1% each, although they lagged behind BTC's performance.

In the foreign exchange markets, hedge funds sold the U.S. dollar against major currencies, driving the dollar index (DXY) to 98.5, its lowest point since April 2022. This 10% decline in the DXY over three months has typically eased financial conditions, encouraging risk-taking in financial markets. The weakness in the dollar also contributed to a continued rally in gold, with the per ounce price reaching a record high, and a slight decrease in futures tied to the S&P 500 and Nasdaq.

Observers attributed the selling of the dollar and the upticks in BTC and gold to comments made by National Economic Council Director Kevin Hassett. He suggested that Trump intended to remove Powell, which was seen as a threat to the Fed's independence. This perception, along with Trump's calls for lower interest rates, likely triggered the market movements. Trump had previously posted on Truth Social that Powell's termination "cannot come fast enough" and reiterated his calls for lower interest rates the following day. Powell, meanwhile, had indicated that the Fed would wait for more economic data before changing borrowing costs and had warned of potential stagflation.

Chicago Fed President Austan Goolsbee cautioned that Trump's potential move to terminate Powell could undermine the Fed's credibility. The political interference threatening the Fed's independence has raised concerns about the future of Bitcoin and other cryptocurrencies. The independence of the Federal Reserve is seen as crucial for maintaining market stability and global economic credibility. Any perceived threat to this independence can lead to increased volatility in traditional financial markets, making cryptocurrencies an attractive alternative for investors seeking to diversify their portfolios.

The surge in Bitcoin's value has also had a ripple effect on other cryptocurrencies. XRP, ETH, and ADA have all seen significant gains, benefiting from the overall bullish sentiment in the crypto market. This trend highlights the interconnected nature of the cryptocurrency ecosystem, where the performance of one major cryptocurrency can influence the value of others. The recent developments underscore the importance of monitoring political and economic factors that can impact the cryptocurrency market. As the perceived threat to the Fed's independence continues to unfold, investors will be closely watching how these events play out and their potential impact on the value of Bitcoin and other cryptocurrencies. The current situation serves as a reminder of the volatility and unpredictability of the crypto market, where external factors can have a significant influence on prices.