Recent tensions between US President Trump and Fed Chair Powell triggered a downturn in US stock markets, with the S&P 500 down 12% and the Nasdaq nearly 18% year-to-date. Trump’s calls for interest rate cuts coincided with a weakening dollar, which has dropped over 10% this year. In contrast, cryptocurrency markets, particularly Bitcoin, maintained strong performance, reaching a four-week high of $88,500.
US President Donald Trump’s recent criticism of Federal Reserve Chair Jerome Powell has intensified market volatility, leading to a decline in the US stock market while benefiting cryptocurrency markets. As of April 21, major indices suffered significant drops: the S&P 500 fell by 2.4%, the Nasdaq decreased by 2.5%, and the Dow Jones lost 1,000 points, reflecting a broader downturn since the year began.
The S&P 500 has dropped over 12% year-to-date, with the Nasdaq declining by nearly 18% as investors moved away from tech stocks. This instability is attributed to escalating tensions between Trump and Powell, particularly regarding trade tariffs and interest rate policies. Trump has advocated for “preemptive cuts” to interest rates, stating that inflation remains low amid a decrease in energy and food prices.
Trump’s remarks about Powell, whom he labeled as “Mr. Too Late,” highlight his frustration with the Fed’s decision to keep interest rates at 4.5%. Powell recently cautioned that ongoing trade tariffs may create a perilous economic environment, potentially leading to stagflation. In response, Trump demanded Powell’s removal, expressing urgency for change in the central bank leadership.
The Fed is anticipated to adopt a cautious stance at the upcoming May 7 meeting, with market predictions suggesting only a 13% likelihood of an interest rate cut, as indicated by CME Fed Watch. Concurrently, the US Dollar Index (DXY) has depreciated significantly, dropping over 10% this year and reaching a three-year low below 98.
Raoul Pal, CEO of Real Vision, remarked on the necessity of a weaker dollar for managing dollar-denominated debts, reinforcing its role in global liquidity and influencing the money supply. Conversely, cryptocurrency markets have managed to sustain their growth; total market capitalization stands at $2.83 trillion. Bitcoin has demonstrated resilience, peaking at $88,500 on April 22, as noted by Bitfinex analysts, highlighting its strength amid overarching market turbulence.
