The myth of the Federal Reserve's independence is collapsing, and the fate of the cryptocurrency market hangs in the balance between two opponents with the same name.
Trump's reality show-style selection is reaching a climax. Two contestants named Kevin are competing to promise lower interest rates in order to win the position of Federal Reserve Chair, which controls the global capital faucet.
This selection is essentially a referendum on whether the Federal Reserve will still maintain its independence. Hassett represents unconditional obedience to the White House's will, while Waller tries to walk a tightrope between political pressure and central bank independence.
01 Finalists: The Background Duel of the Two 'Kevins'
The latest season of Washington's power games features two 'Kevins' with the same name but different surnames as the protagonists. This showdown relates to the direction of global liquidity in the coming years.
Kevin Walsh, a true financial elite. At just 35, he served as a Federal Reserve Governor, having experienced the baptism of the 2008 financial crisis and being an early participant in quantitative easing policy. Surprisingly, he left the Federal Reserve early in 2011 due to concerns about QE, a move that earned him the title of 'principle adherent.'
After leaving the Federal Reserve, Walsh did not distance himself from the decision-making circle. As a scholar at Stanford University's Hoover Institution, he continues to study monetary policy, while also entering Trump's inner circle through marriage—his father-in-law is Trump's old friend Ronald Lauder.
Kevin Hassett, on the other hand, represents a different category. He is a loyal follower of Trump, having served as the Chairman of the White House Council of Economic Advisers and the Director of the National Economic Council, and is a key architect of Trump's tax reform.
Hassett has an academic background (PhD in economics) and think tank experience, but lacks practical operational experience at the Federal Reserve. His loyalty to Trump is unquestioned, but this has become the root of Wall Street's worries.
02 A stark contrast in policy positions: the divergence of quantitative easing art.
The stances of the two Kevins on monetary policy reflect their different perceptions of the role of central banks.
Walsh, as a traditional hawk, has maintained a hardline stance on inflation for a long time. However, in the face of Trump's pressure for rate cuts, he has shown flexibility: proposing a 'rate cut + balance sheet reduction' strategy. He believes that by synchronously reducing the Federal Reserve's balance sheet, the inflation risks that may arise from rate cuts can be offset.
This stance attempts to balance two demands: meeting the White House's request for interest rate cuts while maintaining the core mission of price stability for the central bank.
Hassett has unreservedly supported aggressive easing. He has publicly called for significant and rapid interest rate cuts, even criticizing the Federal Reserve's recent rate cuts as too small. He believes that the productivity gains brought by artificial intelligence create space for rate cuts, a view that has greatly pleased Trump.
Hassett's stance has been consistent: monetary policy should work in conjunction with fiscal policy to serve economic growth goals. However, this stance has also raised concerns about political interference in monetary policy.
03 Trump's calculations: why is he fixated on the 1% interest rate target?
Why is Trump so obsessed with the choice of Federal Reserve Chairman? The answer lies in the numbers: $30 trillion in U.S. Treasury debt.
The White House has calculated that for every 1 percentage point reduction in interest rates, the federal government could save about $360 billion in interest payments each year. This figure is an irresistible temptation for Trump, who faces pressure for re-election.
Trump has made it clear that he hopes to lower interest rates to 1% or even lower within a year. This target is far from the current rate of 3.5%-3.75% and deviates significantly from the traditional framework of the Federal Reserve's decision-making based on economic data.
Moreover, Trump publicly demanded that the new chairman 'consult him' before making interest rate decisions, directly challenging the tradition of independence that the Federal Reserve has maintained since 1951.
The risk of this intervention lies in the possibility that the market may sell U.S. Treasuries due to concerns about the Federal Reserve losing its independence, leading to rising long-term interest rates, which runs counter to Trump's intentions.
04 Wall Street's concerns: why the financial market strongly supports Walsh.
Wall Street votes with its feet, clearly supporting Walsh. JPMorgan CEO Jamie Dimon publicly stated that Walsh would be a 'great Federal Reserve Chairman,' a statement that represents the overall tendency of financial capital.
Wall Street's concerns about the two Kevins differ. The concern regarding Hassett is political decision-making. Bond investors have warned the Treasury that Hassett's appointment could trigger a bond market sell-off, as the market worries about the independence of the Federal Reserve being compromised.
The concern about Walsh is that he may place too much emphasis on inflation control, leading to a slower pace of interest rate cuts than expected. However, on balance, Wall Street believes Walsh is more likely to maintain the independence of the Federal Reserve, which is crucial for the long-term stability of dollar assets.
The market's reaction also confirms this preference. When Trump called Walsh the 'top candidate,' Walsh's winning probability on prediction platforms soared from 15% to 40%, while Hassett fell from 71% to 54%. The market expressed its choice with real money.
05 Opportunities in the cryptocurrency market: a liquidity feast or a false boom?
The impact of the Federal Reserve's policy shift on the cryptocurrency market is profound and complex.
Interest rate cuts influence the cryptocurrency market through two channels: first, by reducing the attractiveness of dollar assets, prompting funds to seek higher returns; second, by increasing market liquidity, driving up risk asset prices.
However, historical experience shows that the cryptocurrency market's response to interest rate cuts is not linear. After the Federal Reserve cut rates by 25 basis points in December 2025, Bitcoin and Ethereum did not rise but fell, indicating that the market is more concerned about the future path of interest rate cuts rather than a single action.
The policy orientations of the two Kevins will lead to different market outcomes.
Hassett's election could trigger a short-term celebration. A faster pace of interest rate cuts may drive up prices of risk assets like Bitcoin, but the uncertainty brought about by political decision-making could exacerbate market volatility.
Walsh's appointment could lead to a more robust increase. He tends to synchronize interest rate cuts with balance sheet reduction, which may imply a more moderate release of liquidity, but a market environment based on independent decision-making is more sustainable.
06 Potential dark horses and timelines: the remaining suspense of the power transition.
Although the 'Double Kevin' occupies the center stage, the plot may still have variables.
Treasury Secretary Scott Bessenet was once a favored candidate of Trump, who even considered having him serve simultaneously as Treasury Secretary and Federal Reserve Chairman. However, Bessenet has repeatedly declined, expressing a preference to remain at the Treasury.
In addition, current Federal Reserve Governors Christopher Waller and Michelle Bowman are also on the candidate list, seen as a compromise choice. However, the market generally believes that the ultimate winner will still emerge from the two Kevins.
The timeline is clear: Trump plans to announce the nominee before Christmas, while the formal handover will wait until Powell's term ends in May 2026.
This timing arrangement means that in the coming months, the market will continue to focus on Washington's power games, with each of Trump's statements potentially triggering market volatility.
In the coming weeks, Trump will make the final decision. However, regardless of the outcome, the golden era of the Federal Reserve as an independent central bank may have already ended. Political considerations will be more deeply embedded in monetary policy decisions, and we will enter a new era of politicized monetary policy.
For investors, the only certainty is that uncertainty will become the new normal. When political power directly intervenes in capital pricing, market logic needs to be recalibrated. Whether to embrace a politically driven short-term market or to stick to the long-term laws of economic fundamentals is a choice every player needs to make.
The outcome of this power game will redefine the flow and cost of global capital. For the emerging asset class of the cryptocurrency market, it may be both a historic opportunity and an unprecedented challenge.
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