Polymarket Douts Trump Can Remove Fed Leaders Amid Political Pressure

Prediction markets on Polymarket suggest growing skepticism about President Donald Trump’s ability to remove Federal Reserve officials Jerome Powell and Lisa Cook, despite his public statements and political ambitions. Traders assigned only a 10% probability that Powell would be dismissed by the end of 2025, signaling strong confidence in the institutional safeguards that protect the Fed from political interference [1]. The controversy stems from Trump’s repeated criticisms of both Powell and Cook, with the latter allegedly under scrutiny for mortgage fraud claims. However, Cook has consistently maintained that her removal would require evidence of misconduct directly related to her official duties [1].

The Federal Reserve’s independence is a cornerstone of monetary policy, designed to insulate economic decisions from short-term political cycles. This episode raises concerns over how political pressure may erode trust in institutions that are traditionally seen as non-partisan. Analysts highlight that the Fed’s independence is not just symbolic—it affects investor confidence, market stability, and the broader perception of U.S. economic governance. A loss of trust could have cascading effects across financial markets, including treasuries, equities, and even cryptocurrency [1].

Financial markets have already shown signs of unease. The U.S. dollar weakened, short-term Treasury yields fell, and safe-haven assets like gold and the Japanese yen rose following Trump’s remarks [1]. These movements reflect a hedging strategy among investors, who are preparing for potential disruptions if the Fed’s governance model is challenged. In parallel, crypto markets have historically responded to such political pressures with increased volatility. Bitcoin and Ethereum have often seen surges in trading volumes during moments of institutional uncertainty, as investors look for assets outside centralized control [1].

The debate over Fed independence has particular resonance in the cryptocurrency space. Blockchain advocates argue that decentralized systems offer a natural alternative to centralized financial institutions. A politically motivated reshaping of the Fed could reinforce the narrative that institutional stability is not guaranteed, thereby increasing the appeal of decentralized finance (DeFi) and blockchain-based assets. This dynamic may drive more capital toward protocols that emphasize trustlessness and resistance to political interference [1].

Analysts warn that the greater risk lies not in immediate market volatility, but in the erosion of long-term trust in the Fed. If investors begin to doubt the central bank’s independence, U.S. treasuries could face credibility issues that extend beyond bond markets into equities and global currencies. This would represent a significant shift in investor behavior and could alter the broader financial landscape [1].

Polymarket’s low probability of Powell’s removal indicates a belief that legal and institutional barriers will prevent Trump from succeeding in his efforts. However, the mere possibility of such an outcome highlights the fragility of the balance between political power and institutional autonomy. Whether the result is a reaffirmation of Fed independence or a shift toward greater political influence, the implications will be felt across traditional and digital financial markets [1].

Source: [1] Polymarket Bets Reveal Doubts on Trump’s Power to Unseat Fed Leaders (https://coinmarketcap.com/community/articles/68ad9d05bdf79f269a041b6e/)