President Trump’s recent challenge to the Federal Reserve and speculation about firing Jerome Powell has created significant market disruptions, resulting in a plunge in stock prices and a surge in gold and Bitcoin. Despite uncertainties, Bitcoin has rebounded, and while gold prices have reached all-time highs, analysts warn of potential market crises stemming from Trump’s trade policies and actions regarding interest rates.
On April 20, significant market turmoil ensued following U.S. President Donald Trump’s remarks regarding the Federal Reserve, potentially igniting a confidence crisis in the U.S. dollar. Bitcoin and cryptocurrency prices are under pressure, dropping notably from a January high of nearly $110,000. Analyst Ray Dalio has indicated a looming financial crisis that may surpass the turmoil of 2008, coinciding with Trump’s contemplation of dismissing Federal Reserve Chair Jerome Powell, an act that could have dire market implications.
Economic advisor Kevin Hassett indicated that the Trump administration continues to evaluate the legality and ramifications of possibly firing Powell. Following Powell’s statement on holding interest rates steady amid the trade war, Trump expressed urgency in his Truth Social account, stating the need for Powell’s removal. Democratic Senator Elizabeth Warren has raised alarms over this scenario, predicting significant market disruption.
In a surprising turn, Bitcoin prices surged following further comments from Trump, who is advocating for immediate interest rate cuts. Bitcoin rose to over $88,000 from its previous low of $75,000. Trump attributed the decrease in inflation to falling costs and suggested further rate cuts to stimulate the economy, highlighting that several reductions were already made in Europe.
As the stock markets dipped, particularly within tech stocks, the U.S. dollar faced declines against other currencies. In contrast, gold achieved new highs, exceeding $3,400 per ounce, as it is usually regarded as a safe haven during times of instability. Crypto analyst Nic Puckrin noted a simultaneous rise in gold and Bitcoin prices, driven by fears surrounding the Federal Reserve.
The repercussions of Trump’s trade policies strain international trading norms and escalate market unpredictability, compelling investors to seek safety in assets like gold and Bitcoin. While Bitcoin diverges from gold in pricing patterns, it is posited that it might still align with gold as a safe asset in the long run. Investor Lark Davis highlighted the uncertainty surrounding Powell’s position, cautioning that his potential dismissal could further unsettle the markets, necessitating eventual intervention through monetary policies.
