Trump’s Critique of Fed Chair Powell Sends Shockwaves Through Crypto Markets

Former President Trump has sharply criticised Federal Reserve Chair Jerome Powell, labelling him “Too Late Jerome” for keeping interest rates at 4.5%. This public fallout has unsettled financial markets, particularly cryptocurrencies like Bitcoin, which trades cautiously around $83,000. Inflation, new tariffs from China, and economic uncertainty deepen the market’s apprehension, with traders awaiting clearer signals from both the Fed and U.S.-China relations.

The recent comments by former President Donald Trump aimed at Federal Reserve Chair Jerome Powell have caused ripples in the financial markets, particularly in the cryptocurrency sector. Criticising Powell for maintaining interest rates at 4.5%, Trump, dubbed him “Too Late Jerome,” raising concerns over political interference in the Fed’s operations. The reaction from crypto traders has been cautious as they track potential impacts on digital asset valuations amid macroeconomic shifts.

Trump’s discontent arose after the Fed’s decision to refrain from lowering interest rates, despite waves of concern about slowing economic growth and newly imposed tariffs on Chinese imports. Analysts warn that these tariffs could fuel stagflation—a scenario combining high inflation with anaemic output—further complicating the Federal Reserve’s policy-making framework.

During a recent White House event, Trump expressed his dissatisfaction openly, threatening that if he wanted Powell replaced, it could happen swiftly. His remarks on Truth Social, insisting that “Powell’s termination cannot come fast enough,” have sparked fears regarding the independence of the Federal Reserve and the integrity of its monetary policy.

In light of persistent inflation, the Federal Reserve opted to hold interest rates steady. Although the Consumer Price Index (CPI) has dipped to 2.4%, it still exceeds the Fed’s target of 2%. Essential items, notably food, continue to experience inflationary pressures, making life challenging for households. Powell warned that Trump’s tariffs could worsen inflationary trends while stunting economic growth, leading to potential economic turbulence.

Crypto markets are reacting to the uncertainty, evidenced by Bitcoin’s sideways trading around $83,000, unable to exceed the resistance point at $86,000. The broader crypto market has reached a capitalisation of approximately $2.75 trillion, with traders adopting a conservative stance amid macroeconomic apprehension. The anticipated rate cuts that could drive bullish trends for digital assets seem less likely, thus contributing to a fragile market sentiment.

Investor confidence among retail traders has also seen a dip, as measured by on-chain analytics firm Santiment, which noted that retail sentiment remains highly sensitive to macroeconomic developments. Any alterations in Trump’s stance or Fed policy could dramatically alter perceptions within the crypto space.

Despite suggesting a potential progress in U.S.-China relations, Trump’s assurances of a forthcoming “very good deal” are met with skepticism due to the lack of formal negotiations. While his comments aim to instill investor assurance, uncertainty remains as escalating U.S.-China tensions could significantly impact both traditional equity markets and cryptocurrencies.

Currently, prediction markets indicate low likelihood of Powell’s removal by 2025, though the mounting political pressure may continuously influence Federal Reserve communications and policy strategies. As a result, the crypto market finds itself in a state of flux, keenly awaiting clarity on both interest rates and international trade policies, with Bitcoin displaying resilience amid looming volatility issues.