Bitcoin has soared thus far on Monday, leading the charge against alternative cryptocurrencies. This rally took place while the dollar index fell to a three-year low. So it’s no surprise that reports have former President Donald Trump considering firing Federal Reserve Chairman Jerome Powell. This troubling news has brought the Fed’s independence under scrutiny, sending the dollar tumbling and Bitcoin and gold soaring.
Bitcoin’s price soared more than 2%, to $87,200, its highest price since April 2, CoinDesk price index data shows. At the same time, the dollar index, measured by the DXY index, reached a three-year low of 98.5, according to TradingView data. Gold had a major rally, achieving the milestone of $3,382 per ounce—an all-time high—adding to its year-to-date gains of 28%.
The key catalyst for all of these abrupt market moves seems to be the perceived danger to the Fed’s independence. Trump posted on Truth Social that "Powell's termination cannot come fast enough" and reiterated calls for lower interest rates the following day. In response to the news, on Friday NEC director Kevin Hassett went on the record defending Trump’s right to swap out Powell. His statement probably started this weekend’s dollar slide and subsequent BTC and gold surge.
Chicago Fed President Austan Goolsbee warned that a move by Trump to terminate Jerome Powell would undermine the credibility of the Fed. Markus Thielen, founder of consulting firm 10x Research, agrees. He argues that this perceived threat to Federal Reserve independence is the most important factor motivating debates today. Jerome Powell reiterated that the Fed will be patient and allow more economic data to roll in before adjusting borrowing costs. As a governor, he warned about the dangers of stagflation. As a result, the DXY is down 10% in three months.
Omkar Godbole, Co-Managing Editor on CoinDesk’s Markets team, owns small amounts of bitcoin, ether, BitTorrent, tron, and dot.
