Crypto markets remain in a holding pattern as political tensions in the U.S. escalate, with President Donald Trump launching a fresh attack on Federal Reserve Chair Jerome Powell. Trump’s aggressive remarks - hinting at Powell’s potential dismissal - have stirred debate over the Fed’s independence and reignited speculation around interest rate policy, a key variable for risk assets like Bitcoin and other cryptocurrencies.
On April 17, speaking to reporters at a White House event, Trump criticized Powell’s resistance to interest rate cuts, calling him “Too Late Jerome.” He later doubled down on Truth Social, accusing the Fed chief of acting too slowly and suggesting his removal might be imminent. “If I want him out, he’ll be out of there real fast, believe me,” Trump declared, escalating tensions between the political and monetary policy spheres.
The remarks come amid Powell’s recent comments warning about the economic risks posed by Trump’s proposed global tariffs, particularly those targeting China. Powell declined to lower interest rates at this week’s meeting, despite mounting political pressure and market anticipation. The Fed’s benchmark rate remains elevated at 4.5%, significantly above pandemic-era levels.
Powell expressed concern that new trade restrictions could lead to a precarious mix of rising prices and stagnant growth - classic indicators of stagflation. “Tariffs may drive inflation higher while suppressing output,” he warned, reinforcing the Fed’s cautious stance on rate adjustments despite inflation slowing to 2.4% - still above the central bank’s long-term target of 2%.
While the Fed aims to balance inflation and employment through monetary tightening, the policy has had mixed success. Certain consumer goods, particularly food, continue to experience outsized price increases, according to the Bureau of Labor Statistics.
Despite Trump’s fiery rhetoric, most analysts and prediction markets still consider the likelihood of Powell’s actual dismissal to be low. The Federal Reserve Chair enjoys a degree of protection from direct political interference, and firing him would likely trigger legal and institutional backlash.
Nonetheless, the prospect alone introduces uncertainty for global markets, including crypto, which is particularly sensitive to U.S. macroeconomic policy. Digital asset markets often react strongly to changes in real interest rates, monetary policy tone, and broader risk sentiment.
With no clear pivot from the Fed and political theater heating up, crypto traders have largely taken a step back, awaiting clearer signals. Bitcoin is currently consolidating above $83,000, unable to break resistance near $86,000, while total crypto market capitalization has held steady around $2.75 trillion.
Analysts at Santiment noted that retail trader sentiment remains reactive to Trump’s comments, which have become a significant variable in market psychology. His hints at a potential U.S.-China trade deal - despite no official engagement from Beijing - have added further volatility to sentiment. “Market narratives can flip on a dime, especially with Trump’s unpredictable influence,” the analysts observed.
In this environment, traders are hesitant to overcommit, wary that any bullish momentum could be swiftly derailed by the next headline. Until the Fed provides a definitive pivot - or the political noise subsides - crypto markets may continue to drift in uncertainty.