Political Pressure on the Fed Could Drive Bitcoin Demand in 2025
Analysts warn that increasing political pressure on U.S. Federal Reserve independence — dubbed an ‘Erdoğanization’ risk by Bitwise’s André Dragosch — could weaken the dollar, raise inflation expectations and shift capital toward alternative stores of value such as Bitcoin. Drawing on Turkey’s 2018–2023 experience (lira collapse, >80% devaluation, inflation above 85% and sharp rises in peer‑to‑peer Bitcoin volume), the report argues that perceived erosion of Fed autonomy under a politicized administration would undermine confidence in dollar‑denominated assets and Treasury markets, prompting investors to seek hedges. Key channels: higher inflation expectations, dollar devaluation, loss of institutional credibility and potential geopolitical de‑dollarization. The analysis emphasizes structural relationships rather than precise price forecasts and notes the 2024 Bitcoin halving reduced new supply issuance, tightening Bitcoin’s economic model. For traders, the takeaway is that threats to Fed independence may strengthen Bitcoin’s narrative as ‘digital gold,’ potentially increasing long‑term demand even amid short‑term volatility. This is not investment advice.
Bullish
The article presents a structural bullish case for Bitcoin driven by macro risks: politicization of the Federal Reserve that could lead to higher inflation, dollar weakness and a loss of confidence in traditional dollar‑denominated assets. Historical precedent from Turkey shows how erosion of central bank independence can accelerate demand for non‑sovereign stores of value (notably Bitcoin), and the 2024 halving reduces new bitcoin supply — both supply and demand factors that favor higher long‑term prices. In the short term, markets may react chaotically: heightened volatility, risk‑off flows, and potential profit‑taking are likely. Institutional investors may hesitate until clearer policy signals emerge, producing intermittent selloffs or correlation breakdowns. Over the medium to long term, persistent concerns about Fed credibility and dollar strength would likely increase allocations to Bitcoin as an inflation and de‑risk hedge, supporting a bullish structural outlook. Comparable events: capital flight and crypto demand surge in Turkey (2018–2023) and episodic BTC rallies during periods of fiat weakness or macro uncertainty (e.g., post‑2013 and 2020–2021). Traders should watch Fed governance signals, inflation data, dollar indices, Treasury yields and on‑chain demand metrics (exchange flows, OTC volumes, P2P volumes) to time positions and manage risk.