- Trump threatened to fire Fed chair Jerome Powell if he remains at the central bank after his term ends in May.
- Markets haven’t priced in the upcoming leadership transition, analyst says.
Donald Trump just threatened to fire Jerome Powell.
The US president’s feud with the chair of the Federal Reserve escalated this week after Trump said he’d sack Powell unless the latter steps down when his term is up.
And Bitcoin traders should take notice, Kraken’s chief economist Thomas Perfumo says.
Investors are sleeping on the Federal Reserve’s leadership transition in May, which “may be the single most important variable” for cryptoassets, he said in a note shared with DL News. “But the market is treating it as an afterthought.”
The stakes are high for Bitcoin investors. The top cryptocurrency has surged to $75,000 over the past week as the US-Israeli war with Iran seems to be deescalating. Yet, it is still roughly 40% below the record high price Bitcoin notched in October.
How the inter-governmental spat resolves will determine whether or not the rally continues, Perfumo argued.
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‘Fire him’
Trump has made no secret of his thoughts on Powell.
The president has been clashing with the Fed chair for months over interest rates. Trump wants interest rates to go down, which is usually bullish for risk-on assets like Bitcoin because it floods the market with liquidity.
Powell, however, has refused to slash rates due to the macroeconomic uncertainty caused by the White House’s chaotic foreign policies.
Now, the conflict is coming to a head as Powell’s term as chair ends on May 15. However, Trump’s nominee to replace him — Kevin Warsh, who is seen as a pro-crypto candidate — has yet to be confirmed. Even so, Trump offered an ultimatum to Powell if he doesn’t step down in May.
“Then I’ll have to fire him, okay, if he’s not leaving on time,” Trump told Fox Business on Wednesday. “I’ve held back firing him. I’ve wanted to fire him, but I hate to be controversial.”
The White House vs. Fed drama plays a key role in determining the price of risk-on assets like Bitcoin, Perfumo said.
Next chair?
Three huge catalysts “will reveal how regime change at the US Federal Reserve impacts risk assets for the remainder of 2026,” Perfumo said.
These are Warsh’s confirmation hearing on April 21, an ongoing criminal probe, and future Federal Open Market Committee meetings.
Investors are likely to focus closely on Warsh’s nomination hearing, scheduled for Tuesday, April 21, especially for any scrutiny of his earlier views and how he now approaches the Fed’s balance sheet.
“Warsh’s public record suggests something the market hasn’t fully absorbed: he favors genuine rate cuts,” Perfumo said.
Warsh’s past comments suggest a consistent aim to boost money in the financial system and support investment, including in emerging technologies such as artificial intelligence, according to Perfumo.
But even as his time as chair runs out, Powell still has two years left as a Fed governor. Most past chairs have stepped down completely after being replaced, but Powell has not said what he plans to do.
His exit has become more complicated because of an investigation into the Fed’s headquarters renovation. US attorney Jeanine Pirro has tried to subpoena Powell for information on the project, but a judge blocked the move.
At the same time, Republican Senator Thom Tillis has said he will hold up Warsh’s nomination in the Senate Banking Committee until the investigation is finished. Powell has said he will stay in his role until the probe ends and a successor is confirmed.
Trump has pushed for the investigation to continue, calling the project “probably corrupt” but also “incompetent”.
Then there’s the FOMC meetings where the US central bank decides whether or not to cut interest rates.
“The June FOMC press conference scheduled for June 17, 2026 represents the first opportunity for public discourse concerning the change in leadership and its impact on the FOMC’s policy agenda,” Perfumo said.
Traders remain sceptical about the chances of a rate cut in June, according to the CME FedWatch tool. They give the FOMC a 1.6% chance of slashing rate, a 1.5% chance of hiking rates and a 97% chance of rates remaining stagnant.
Crypto market movers
- Bitcoin is up 0.8% over the past 24 hours, trading at $74,699.
- Ethereum is up 0.6% over the past 24 hours at $2,342.
What we’re reading
Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email him at lance@dlnews.com
