The market has started to price in the dovish frenzy!
The bets in the prediction market are speaking, and Wall Street traders are wagering real money on a new 'extremely dovish' Fed chair.
Just last week, when Trump was asked about the Federal Reserve Chair candidate on Air Force One, he revealed a mysterious smile: 'I already know who I'm going to choose.' This statement instantly ignited the market, with all signs pointing to the same person: Kevin Hassett, Trump's most loyal economic advisor.
The data from the prediction market is shocking: Hassett's winning probability once broke 85%, although the latest situation shows increased competition, with another candidate, Walsh, seeing a significant rise in his winning probability to 44%. But as a veteran cryptocurrency analyst, I sense that the market is about to undergo a major transformation.
01 Loyalty Pricing: Why Hasset Became the Biggest Favorite
Trump's criteria for selecting the Federal Reserve chairman has never been so clear: loyalty above all else.
Hasset's relationship with Trump dates back nearly a decade, having served as the chairman of Trump's Economic Advisory Council and the director of the National Economic Council. This long-term loyalty is an advantage that other candidates find difficult to match.
More critically, Hasset has recently undergone a remarkable transformation from an economist who once defended Federal Reserve independence to a 'strong ally' of Trump who criticizes the Federal Reserve.
He publicly criticized Powell for the slow pace of rate cuts, even suggesting that there is 'anti-Trump partisan bias' within the Federal Reserve. This blatant political statement is exactly the kind of 'loyalty test' that Trump values most.
02 Dovish Wild Card: Hasset Will Open the Monetary Floodgates
As a veteran who has experienced multiple bull and bear markets in the cryptocurrency space, I have never seen such a dovish candidate for Federal Reserve chairman.
Hasset has made it clear: if he becomes the Federal Reserve chairman, he will immediately cut interest rates and support a 50 basis point cut in December. This statement has led the market to start pricing in the possibility of 'larger and faster rate cuts.'
Unlike the current Powell's 'data-dependent' model, the Federal Reserve under Hasset may more quickly shift to a 'demand-driven' model responding to the White House's push for economic growth. This means that the rate cuts in 2026 may exceed market expectations.
Haitong Futures Research Institute's assistant general manager Gu Jianan pointed out that when news broke that Hasset had become a popular candidate, the yield on U.S. 10-year Treasury bonds immediately dropped below 4%. This market reaction indicates that investors have begun to prepare for a loose monetary era.
03 New Opportunities in the Crypto Market: When Doves Meet Politicization
For cryptocurrency investors, Hasset's potential appointment has dual significance.
On one hand, loose monetary policy usually benefits risk assets. Bitcoin and major cryptocurrencies have historically performed well in a liquidity-rich environment. Real estate, technology stocks, and other interest-sensitive sectors have already received a boost due to Hasset's potential nomination, and cryptocurrencies are likely to be the next beneficiaries.
On the other hand, Hasset has deep ties to the cryptocurrency industry. He currently serves as an advisor to Coinbase and holds shares, which leads the market to expect the Federal Reserve to adopt a more inclusive stance towards digital assets.
More importantly, if Hasset leads the Federal Reserve, it may lead to the dollar entering a period of cyclical depreciation. The weakening of the dollar often creates a favorable environment for alternative assets like cryptocurrencies.
04 Underlying Risks: The Loss of Federal Reserve Independence and Market Concerns
Of course, behind this seemingly perfect dovish narrative lies significant risks.
Multiple analysts have warned that Hasset's appointment may lead to a loss of Federal Reserve independence. Chief economist Xiong Yuan of Guosheng Securities stated that if Hasset is elected, the market may trade on the narrative of 'the Federal Reserve losing its independence.'
The cost of losing this independence may be very high. The Financial Times reported that several large asset management firms have expressed concerns to the U.S. Treasury, fearing that Hasset may implement indiscriminate rate cuts to please Trump.
The worst-case scenario may replay the stagflation tragedy of the 1970s, when Federal Reserve Chairman Burns succumbed to pressure from the White House, leading to uncontrolled inflation due to relentless rate cuts. Chief economist Yan Xiang of Founder Securities believes that reducing the Federal Reserve's independence may significantly raise inflation risks, with the most extreme scenario resembling the stagflation environment of the 1970s.
In the coming weeks, as Trump officially announces his nomination decision, the market will face a real test. A Wall Street trader privately told me: 'We have already priced in a dovish Federal Reserve, but we have not yet priced in a politicized Federal Reserve.'
If Hasset really takes office, the cryptocurrency market may welcome an unprecedented liquidity frenzy. However, as a veteran who has experienced multiple market crazes, I must remind you: when central bank independence becomes a political sacrifice, short-term gains may lead to long-term pain.
Dear readers, how are you preparing your layout? Feel free to share your thoughts in the comments!
Follow me@加密崎哥 #美国非农数据超预期 $BTC
