Bitcoin Surges Amid Concerns Over Federal Reserve Independence

Bitcoin (BTC) rose over 2% to $87,200 as concerns over the Federal Reserve’s independence caused the dollar index to plummet to a three-year low. Traders have sold off the dollar, benefiting Bitcoin and gold, which also hit record highs. Continued scrutiny over Fed Chairman Powell’s position, spurred by comments from President Trump, is influencing financial markets significantly.

Bitcoin (BTC) has surged over 2% to reach $87,200, following a decline in the U.S. dollar index to a three-year low. This movement occurred amid concerns regarding the independence of the Federal Reserve, particularly after reports suggest President Trump is contemplating the removal of Chairman Jerome Powell. Major alternative cryptocurrencies such as XRP, Ethereum (ETH), and Cardano (ADA) also increased but trailed behind Bitcoin’s performance.

In the foreign exchange markets, hedge funds actively sold the dollar against currencies like the euro, yen, and Australian dollar. As a result, the dollar index fell to 98.5, representing a 10% drop over three months. This depreciation typically enhances financial conditions, encouraging risk-taking in various financial sectors.

Gold prices reflected similar trends, achieving a record-high of $3,382 per ounce, benefiting from the dollar’s weakness and a notable rally in BTC. Futures contracts for the S&P 500 and Nasdaq fell by 0.5% in response. Analysts suggest comments from Economic Council Director Kevin Hassett regarding Trump’s goal to replace Powell instigated the dollar’s decline.

Markus Thielen of 10x Research noted that the rise in Bitcoin was largely influenced by the U.S. dollar’s significant drop alongside gold’s rally, both prompted by Trump’s comments regarding Powell’s position. Trump’s social media post underlined his frustrations with Powell and called for reduced interest rates amid ongoing discussions about the economy’s status.

Chicago Fed President Austan Goolsbee expressed concerns that Trump’s potential actions against Powell could damage the Fed’s credibility amid talks of stagflation. The current market climate indicates significant volatility, driven by political and economic uncertainties.