Family, who understands! The annual drama in Washington is more thrilling than the liquidation of cryptocurrency contracts. Trump, with all his efforts, tried to take Powell down, but instead, the plot flipped and he was pressed down to the ground—this move completely bewildered the global financial markets, with even more undercurrents stirring in the crypto circle!
Previously, the entire network was sitting on small stools waiting for the Federal Reserve's 'leadership change' finale, betting that the probability of Powell being ousted before the end of May soared above seventy percent. Many crypto players were wagering that 'a leadership change means a rate cut' and strategically positioning themselves for the swing. As a result, the Department of Justice threw out a subpoena, causing a complete 180-degree turn in the plot: Powell not only wasn't 'ousted' but instead, thanks to this 'political farce', managed to weld his seat more securely than the Bitcoin blockchain.
Let's get to the point: this reversal is not coincidental but a direct confrontation between the independence of the Federal Reserve and political interference. On the surface, the investigation is aimed at the Federal Reserve's office renovation overspend and questionable congressional testimony, but anyone with a discerning eye knows this is Trump's 'sunny conspiracy' to pressure for rate cuts—since his re-election in 2025, Trump has forced Powell to significantly cut rates to stimulate the economy. However, the Federal Reserve, due to inflation pressures, only initiated three small rate cuts last September, which completely fell short of expectations, and the contradictions between the two sides have long been laid bare. More critically, the investigation leader was personally appointed by Trump, making this 'targeted strike' too obvious.
However, what Trump failed to calculate is that this move directly stirred up a hornet's nest. Senators from both parties have rarely united, condemning this as a blatant violation of the Federal Reserve's independence, even threatening to veto all Federal Reserve candidates nominated by Trump; major global central banks, including the European Central Bank, have also voiced support for the Federal Reserve's independence, effectively giving Powell a 'get out of jail free card'. The market has voted with its feet, and the probability of Powell leaving before the end of May has plummeted to less than 50%, with expectations for his departure by the end of the year plummeting sharply. The price of gold has broken through historical highs, fundamentally reflecting the pricing of 'political interference failure'.
The battle for candidates has completely changed. Hassett, who was strongly supported by Trump, has lost favor, while the hawkish figure Waller has risen unexpectedly. This former Federal Reserve governor is a tough character; not only is he a staunch opponent of quantitative easing, but he also openly states that Powell has failed in interest rate control and policy credibility, advocating for 'balance sheet reduction + functional contraction', bringing the Federal Reserve back to focusing on price stability. For the crypto market, if Waller takes over, the short-term is likely to continue a hawkish stance, and expectations for liquidity easing will completely cool down, making the fantasy of the crypto circle relying on a rate cut to soar likely to collapse.
Interestingly, Powell's 'exit strategy'—his term as chair of the Federal Reserve ends in May, but his term as governor runs until 2028. According to convention, after stepping down as chair, he would also resign from his governor position, but given the current situation, Powell could very well break convention and remain a governor, continuing to have a voice in decision-making, effectively sentencing Trump's plan to install a puppet to a 'stay of execution'. This means that the 'fight' between Trump and the Federal Reserve will extend throughout the year, one pushing for rate cuts to protect the economy, and the other maintaining inflation stability and currency, with this tug-of-war directly influencing global liquidity trends.
For us crypto players, this is not as simple as watching a big show. Current data from the Chicago Mercantile Exchange shows a 95% chance that the Federal Reserve will keep interest rates unchanged in January. Short-term liquidity is unlikely to see significant relaxation, and mainstream coins are likely to maintain a volatile trend. However, in the long run, if Powell stays on as a governor to defend independence, policy stability will strengthen, and the volatility of the crypto market will increasingly revert to its fundamentals. If Waller takes over, hawkish policies may trigger a new round of market reshuffling, further compressing the survival space for altcoins.
To sum up: Trump wants to use political means to manipulate the Federal Reserve, but instead, he has given Powell a layer of 'independence armor'. This year's main storyline in the global financial market is the game between these two giants. The crypto circle should not blindly chase price increases and decreases, but focus on the statements made at each Federal Reserve meeting, as well as Powell's status.
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