Trump Fires Fed Governor Cook, US Dollar Plunges
On August 26, 2025, former President Donald Trump unexpectedly dismissed Federal Reserve Governor Cook. This rare political intervention undermined the Fed’s independence and sent the US dollar tumbling against major currencies. Investor uncertainty spiked as traders questioned future monetary policy and potential political interference. In the forex market, EUR/USD and GBP/USD rose while USD/JPY fell as the yen gained safe-haven status. Beyond currencies, equities and bonds saw heightened volatility, and gold rallied amid risk-off flows. The crypto sector felt the impact too: Bitcoin (BTC) strengthened as an alternative store of value, while stablecoins came under scrutiny over dollar stability. With the Fed’s interest rate outlook now clouded by political pressure, market participants face increased risk. Key strategies include diversifying into non-dollar assets, employing currency hedges, and exploring alternative stores of value like cryptocurrencies. The event underscores a new era of political risk for central banking and demands agility amid ongoing US dollar volatility.
Bullish
We classify this development as bullish for cryptocurrencies. A sudden US dollar plunge historically prompts investors to seek alternative stores of value, among which Bitcoin has become the most liquid and accessible. Similar dollar sell-offs during geopolitical or policy crises—such as the 2020 COVID-19 shock—coincided with strong BTC rallies. In the short term, heightened volatility and risk-off sentiment may drive speculative flows into crypto as traders chase yields and hedges against a weakening dollar. Over the medium to long term, erosion of confidence in Fed independence could sustain demand for decentralized assets that operate outside traditional monetary systems. However, persistent market uncertainty also means caution: rapid reversals in risk appetite can trigger sharp crypto corrections. Overall, subdued dollar strength and political risk in central banking create a favorable backdrop for crypto adoption and price support.