Crypto, Bonds Rally as Markets Price in Dovish Fed Under Trump-Eyed Hassett

Trump Signals Preference for Kevin Hassett as Next Fed Chair

Donald Trump has increasingly signaled his preference for Kevin Hassett as the next Federal Reserve Chair, a move that has sent shockwaves through financial markets and crypto sectors alike. Hassett, currently the director of the White House National Economic Council, is widely seen as a dovish economist who advocates for lower interest rates to boost economic activity and support financial markets. His pro-growth stance has made him a top contender in the ongoing search for a replacement for Fed Chair Jerome Powell, whose term ends in May 2026 according to reports.

The prospect of a Hassett-led Fed has already influenced market sentiment, with prediction platforms like Kalshi and Polymarket showing a sharp rise in odds of his nomination following Trump's recent remarks. Hassett's public support for crypto assets, including his advisory role and significant stake in Coinbase, has made him a favorite among digital asset investors, who are now closely watching the timeline for an official announcement according to financial reports.

As the White House continues to narrow down its final list of candidates, the financial world is bracing for a potential shift in monetary policy. With Trump reportedly having already decided on a nominee, the focus is now on how Hassett's potential leadership will shape the Fed's approach to inflation, interest rates, and the broader economic landscape as analysts indicate.

Why the Standoff Happened

Kevin Hassett's ascent as the top candidate for the Fed Chair position has been driven by his alignment with Trump's economic priorities and strong backing from key allies, including Treasury Secretary Scott Bessent. Hassett has consistently pushed for more aggressive rate cuts, which aligns with Trump's campaign promises of lowering borrowing costs and stimulating economic growth. His dovish stance on monetary policy has also made him a favorite in the crypto community, where lower rates are typically seen as a positive catalyst for risk assets like Bitcoin according to crypto analysis.

Hassett's economic record is marked by both praise and controversy. He gained notoriety in the early 2000s for predicting a new bull market in U.S. equities shortly before the dot-com crash. More recently, his advocacy for aggressive monetary easing has aligned with Trump's demands for a more pro-growth Fed. Hassett has also publicly criticized current interest rates as being too high and has pushed for a more rapid pivot to accommodative policy as financial reports show.

Despite his credentials, Hassett has faced skepticism from some economists and former colleagues, who question whether he has the temperament and independence required for the Fed Chair role. His open criticism of the Fed and its policies during the Trump administration has raised concerns about his ability to maintain the central bank's long-standing reputation for independence according to financial analysis.

How Markets Reacted

Financial markets have already begun pricing in the possibility of a Hassett-led Fed, with long-term interest rates declining in response to the growing likelihood of his nomination. Hassett has pointed to this market reaction as evidence that his pro-growth agenda is already being accepted by investors. The prospect of a dovish Fed has also led to a rise in risk appetite, with crypto assets seeing a modest boost as investors speculate on lower borrowing costs and easier monetary policy as market data shows.

In the crypto space, the anticipation of a Hassett-led Fed has sparked renewed optimism. Industry experts believe that lower interest rates would encourage more institutional participation in crypto markets through products like ETFs and tokenized assets. This would provide much-needed liquidity and potentially stabilize the volatile crypto market according to financial analysis.

However, the broader market remains cautious, particularly given the uncertainty surrounding the Fed's ability to navigate a delicate balance between inflation control and economic growth. While Hassett's dovish stance is seen as a positive for risk assets, some analysts warn that an overly aggressive pivot could lead to unintended consequences, such as inflationary pressures and a potential loss of credibility for the Fed as financial reports indicate.

What Analysts Are Watching

Analysts are closely monitoring how the Fed's policy shift under Hassett could impact the broader financial landscape, particularly in the coming year. The potential for rapid rate cuts could provide a tailwind for crypto markets, but it also raises questions about how the Fed will manage inflation expectations. The success of Hassett's leadership will depend on his ability to maintain credibility with both markets and policymakers while implementing a more aggressive pro-growth strategy as analysts report.

In addition, the Fed's role in regulating the banking sector could have indirect effects on the crypto industry. If the Fed were to loosen or tighten specific rules related to crypto firms' dealings with traditional banks, it could influence the availability of financing and the overall health of the crypto ecosystem according to market analysis.

For now, the market is in a waiting period, with the official nomination expected to be announced early in 2026. Until then, traders and investors will continue to price in the potential for a more dovish Fed, with crypto markets particularly sensitive to any developments in the leadership change according to financial reports.