Trump’s Threat to Oust Fed Chair Sends US Dollar to 3-Year Low, Boosting Bitcoin to New Highs
The US dollar is facing mounting pressure as reports circulate that former President Donald Trump is considering removing Federal Reserve Chairman Jerome Powell. This potential shake-up at the helm of the Fed has sent the US Dollar Index (DXY) tumbling to its lowest level in three years — a move that has invigorated crypto markets, with Bitcoin (BTC) soaring past $87,000.
Dollar Wobbles as Political Tensions Rise
As of this week, the DXY has dropped to 98.2, dipping below the 99 mark for the first time since March 2022. The decline coincides with growing speculation around Powell’s job security, following statements from National Economic Council Director Kevin Hassett, who revealed that Trump and his team are “studying the matter” of Powell’s potential dismissal.
Trump’s criticism of Powell is far from new, but recent frustrations have intensified over the Fed's reluctance to cut interest rates amid inflationary concerns and global monetary easing. In a recent social media post, Trump accused Powell of being “always too late and wrong,” pointing to the European Central Bank’s proactive rate cuts as a contrast.
Market Reactions Across the Board
The dollar’s weakening has sparked strong reactions across asset classes. Economist Peter Schiff noted the broader implications in a post on X (formerly Twitter), highlighting gold’s record surge to $3,380 and the euro’s climb above $1.15. The dollar has also weakened against the yen and Swiss franc, touching multi-year lows.
Amid the dollar’s slide, Bitcoin appears to be benefiting from renewed investor interest. Seen by many as a digital hedge against fiat currency instability, BTC surged to $87,586, marking a 3.5% gain in a single day. The current price level is the highest since early April and comes as traders weigh the potential for looser US monetary policy under renewed Trump influence.
Sean McNulty, Derivatives Trading Lead at FalconX, told Bloomberg that “USD weakness is driving the rally in crypto,” a trend that may continue if further political pressure results in policy shifts from the Fed.
A Test of Central Bank Independence
While Powell’s term as Fed Chair is set to run until May 2026, the political pressure raises critical questions about the central bank’s independence. Historically, the Federal Reserve operates separately from the executive branch, with legal protections shielding its leadership from abrupt dismissal. However, the mere suggestion of intervention is already reshaping market sentiment.
If Trump’s efforts lead to a more dovish Fed stance or changes in leadership, analysts suggest this could further weaken the dollar and fuel additional gains in risk assets — particularly cryptocurrencies.