Bitcoin investors have not yet fully accounted for a potentially more dovish Federal Reserve monetary policy, which hinges on the appointment of a new Fed Chair after Jerome Powell. Economist Alex Krüger highlights that the final influence on Bitcoin’s price will depend on U.S. President Donald Trump’s nomination for Powell’s successor.
Market participants anticipate the Federal Reserve’s first possible interest rate cut of the year, expected in September, to create favorable conditions for Bitcoin (BTC). However, selecting the right Fed Chair nominee could further strengthen these bullish trends.
Federal Reserve rate cut expectations
Krüger expressed strong confidence that the current economic cycle is far from over, anticipating a shift towards a more accommodating monetary policy:
- A substantial move to dovish policy is expected following leadership changes within the Fed.
- Bitcoin’s market pricing will begin adjusting once President Trump officially announces the new Fed Chair.
Jerome Powell’s tenure expires in May 2026, and potential candidates have already been identified by the Trump administration, which includes notable figures such as David Zervos, Rick Rieder, and Larry Lindsey.
Trump’s impact on Fed leadership and Bitcoin
Trump’s relationship with Powell has been tense, marked by public criticisms over the Fed’s approach to interest rates. This dynamic adds uncertainty around how monetary policy will evolve under new leadership.
This political context is significant because the Fed’s decisions directly impact Bitcoin by affecting interest rates and investor risk appetite.
Market data shows that 83.9% of investors expect the Fed to implement a rate cut at the upcoming September meeting, as indicated by the CME FedWatch Tool. Retail capital reserves are waiting on such policy shifts, with experts like Coinbase’s David Duong noting that easier monetary stance could lead to increased retail involvement in crypto markets.
In summary, while the market acknowledges a possible rate cut, the full anticipation and corresponding Bitcoin price adjustment will unfold only after President Trump announces the new Federal Reserve Chair.
This article is for informational purposes only and does not constitute investment advice. Always conduct your own research before making financial decisions.
