Hey, folks, take a look at our Uncle Trump. If he could kick off his new term with a 'world peace' style opening, that would be quite a spectacle! For instance, if he stood up and declared, 'I, Trump, have 100% trust in Powell!' Just thinking about that image makes me chuckle. But if he really did that, would the Bitcoin market also be happy, or would it have a little 'peak adjustment' episode?
But the reality is, ever since Trump took the lead in the prediction market and was 're-elected' (though it's hypothetical, but we just want to have some fun), the U.S. bond market has been like a kicked soccer ball, falling down with a bang, while mortgage rates and various family loan interests have been soaring. If this continues, those voters hoping for Trump to make housing prices more affordable and improve their lives might end up crying in the bathroom. The Bitcoin market might also see some adjustments due to these macro changes.
But don't rush, Trump still has a 'trust card' he hasn't played! He could reveal this trump card and announce his unconditional trust in Fed Chair Powell since Powell's term lasts until May 2026. Then, Trump could make a 'silence is golden' promise and stay quiet on monetary policy; wouldn't that make everyone happy? Of course, it still depends on whether the Bitcoin market agrees.
However, Trump’s new tariff policies and that frighteningly high deficit have already made bond magnates uneasy. Coupled with his little 'issues' regarding the Fed's independence, it’s just adding insult to injury! This uncertainty is not good news for high-risk assets like Bitcoin.
Back in the day, Trump used to 'spar' with Powell on Twitter, complaining about high interest rates and even threatening not to renew Powell's contract. Now, various speculations are flying online about how the new president might 'deal' with Powell, pushing for his early 'retirement' or weakening his power. Such political turmoil could make Bitcoin investors feel uneasy.
During an interview, Trump said he wouldn't fire Powell, but his tone sounded like he was saying, 'Look, if he does well, I'll let him stay until the end of his term.' This statement was as good as saying nothing. The Bitcoin market probably looked confused after hearing this.
The Fed just cut rates by 25 basis points, and Powell was immediately pressed by reporters: 'What will you do if Trump's advisors tell you to leave?' Powell remained calm: 'I won't leave.' The reporter followed up: 'Legally, you don’t have to leave?' Powell smiled slightly: 'Nope.'
Look, Powell is serious! As soon as the news broke, the 10-year U.S. Treasury yield dropped several points, falling over ten points in total that day—it was more thrilling than a roller coaster! The Bitcoin market might also see some short-term adjustments due to these fluctuations in interest rate expectations.
But Uncle Trump is not someone who usually plays by the rules, nor is he good at 'coexisting peacefully' with those who disagree with him. His previous team members were frequently changed, making each transition feel like a grand performance. He speaks directly, and sometimes just one sentence can make U.S. bonds and stocks shake. The Bitcoin market is quite used to this 'Trump effect'.
This time, it seems that his 'think tank' around him doesn't plan to stop him. For instance, that hedge fund manager Scott Bessenet, who might be a candidate for the next Secretary of the Treasury, actually came up with the idea of a 'shadow Fed chair', saying it’s to give the market some advance notice. This is simply adding pressure to the Fed's credibility! Such uncertainty in policy is not good news for Bitcoin.
More importantly, if Trump wants to be 'willful' again, the market won't easily buy it like before. After all, inflation is so high, and the deficit is so large that everyone is on edge. Bitcoin investors might also choose to temporarily step back and observe due to this uncertain macro environment.
It seems that for the next year and a half, or even longer, Trump will have to be 'entangled' with Powell. Trump, do you want things to get better, or do you want to keep 'stirring things up'? The Bitcoin market might also see some short-term peak adjustments due to this political and economic uncertainty.
Powell is quite a stable figure. Although he made a few mistakes earlier, he still managed to control inflation and prevent unemployment from skyrocketing. He is now a 'hot commodity' and needs to ensure that borrowing costs do not rise sharply, or else the real estate market and economic growth will suffer. For Bitcoin, a stable Fed policy environment is extremely important.
So, keeping Powell at the helm of the Fed is a wise move for the U.S., and it might also be a smooth path for Trump since he needs to rely on a strong economy to win the midterm elections in 2026! As for Bitcoin, let it follow the market's rhythm—it should rise when it needs to and fall when it needs to; we’re just here for the fun!
