Powell Defends Fed Independence as Yellen Cautions Trump
Renewed pressure from former President Trump over a Federal Reserve headquarters renovation budget prompted threats to remove Chair Jerome Powell. Treasury Secretary Janet Yellen warned Trump against dismissing Powell, saying it could undermine Fed independence and destabilize markets.
Powell responded by reaffirming his commitment to Fed independence and legal safeguards. He will complete his term through May 2026 and can remain on the Board of Governors until January 2028. Yellen is also vetting potential successors and has suggested Powell resign his board seat alongside his chairmanship to avoid governance confusion.
For cryptocurrency traders, Fed independence means policy will stay data-driven with limited chance of premature rate cuts. Restrained liquidity is likely to weigh on Bitcoin and other risk assets in the short term. Traders should monitor Fed communications closely for guidance on interest-rate paths and market stability.
Bearish
The reaffirmation of Fed independence and Yellen’s protective stance indicate a cautious, data-driven monetary policy with low odds of near-term rate cuts. This tightening of liquidity is likely to dampen short-term upside momentum for Bitcoin and altcoins, putting pressure on risk assets. Over the longer term, strong Fed credibility may support steady confidence, but sustained higher rates or a conservative stance could limit significant crypto rallies. Traders dependent on liquidity expansions will find fewer bullish catalysts, resulting in a broadly bearish outlook.