Jerome Powell, the Federal Reserve Chair, has been dubbed one of the most unfortunate Fed chairs due to the chaotic aftermath of Donald Trump’s tariff policies. After Powell disregarded Trump’s calls for interest rate cuts, the former president threatened to remove him through the Supreme Court. Let’s explore the underlying issues of this conflict and whether Powell’s resignation could benefit the cryptocurrency market.
What sparked the dispute?
The discord between Powell and Trump isn’t a new phenomenon. Powell’s commitment to maintaining high interest rates in an effort to manage inflation has consistently troubled Trump. Although Trump stated in December 2024 that he wouldn’t seek to replace Powell, it appears this time he’s reached his limit.
The tariffs imposed during the so-called Liberation Day on April 2, 2025, had a significant negative impact on the global stock market. Consequently, the cryptocurrency markets experienced declines ranging from 10% to 20% on April 7, and that same day, many stock markets faced their worst losses in decades. Liquidations in the crypto space approached $888 million on that date.
The American markets experienced relatively less severe declines, partially due to speculation about a potential 90-day suspension of tariffs. Initially dismissed by the White House as false information, it later emerged that the pause was indeed accurate, save for China. However, the U.S. imposed even stricter tariffs on China, increasing them to 145% at the time of writing. Media outlets characterized these tariffs as a “shock” to both the economy and the markets.
The fear and greed index plummeted to an extreme “fear” level following the Liberation Day events and the subsequent week. The condition appeared dire for small businesses in the U.S., as highlighted by Pershing Square CEO Bill Ackman in his post on X.
Trump showed no remorse for the upheaval in the markets. In February, he cautioned the public about the potential “pain” the tariffs might inflict on Americans, claiming it was a necessary cost for a forthcoming golden age in the U.S.
However, the announcement of a 90-day suspension and the willingness to negotiate with multiple countries, including China, shifted the atmosphere. Some speculate that Trump aimed to intimidate other nations into concession, while others believe he yielded to the demands of influential billionaires and investors. Regardless, many are puzzled about how imposing barriers on American companies operating in China aids the country’s prosperity.
On April 10, reports revealed a drop in the U.S. inflation rate. While Trump reacted positively to the news of falling inflation, he continued to advocate for an interest rate cut as a solution to the market’s turmoil. This decision rests with the Fed, which operates independently. Jerome Powell, leading this independent institution, has hesitated to implement any rate cuts.
Powell vs. Trump
According to a recent article, Powell finds himself in an untenable situation where any decision—whether to cut interest rates or keep them—could be detrimental to the economy. Lowering rates risks igniting inflation, while maintaining them overlooks the cooling economy and could lead to a labor market downturn, ultimately resulting in rising inflation anyway.
Nonetheless, Powell remains firm on not cutting rates, prioritizing inflation control and mitigating economic risks. On April 4, he indicated that central banks should first evaluate the rapid changes in trade policy initiated by Trump.
It seems Trump is not pleased with Powell’s resistance and is reportedly looking to remove him through the Supreme Court. Reports indicate that Trump has requested the Supreme Court to allow him to terminate high-ranking officials from two independent agencies. This could potentially target Powell, who recently stated he has no intention of resigning before the completion of his term.
If the Supreme Court overturns the 1935 precedent set by the Humphrey’s Executor vs. United States case, Powell could be dismissed. This precedent has provided him with protection from being removed by executive action. However, some interpret this precedent as conflicting with Article II of the Constitution, which Trump might use as justification for firing Powell.
Such a move may be perceived as an attempt by Trump to consolidate power and reduce the decentralization within the government. Conversely, investors anticipating interest rate cuts may welcome this action if it were to happen.
Could the crypto market benefit from Powell’s exit?
In December 2024, Powell’s announcement of a low interest rate cut ended the crypto bull run that was gaining momentum at that time. At that point, he was not regarded as a friend of cryptocurrency. However, he has shown support on other occasions, notably criticizing the debanking of crypto clients by financial institutions. The Fed’s previous indications of a potential rate cut in 2026 would have set the stage for greater Bitcoin adoption in the future.
Trump may seek to appoint a more pro-crypto successor, such as Kevin Warsh, or find someone more compliant who would agree to cut rates at his request. While lower interest rates could spur inflation—an environment often favorable for Bitcoin in the short term—Trump’s overall crypto-friendly approach is already a positive signal for Bitcoin. Attempting to oust Powell, who has effectively executed his duties, merely to initiate rate cuts might not be the most strategic decision. Powell’s term is set to conclude in May 2026. We’ll see how this unfolds.