Bitcoin's price is under pressure as Donald Trump intensifies his criticism of the Federal Reserve, stoking fears of market instability. Not only has Trump repeatedly called for interest rate cuts, he has threatened to fire Fed Chair Jerome Powell. These shocks have spooked investors already causing a plunge in the stock market and the value of bitcoin. Concerns are mounting that the current trade war and potential dollar crisis will compound this unrest, further straining the market for cryptocurrency.
Moreover, the current bitcoin price has struggled to maintain value. Losses since January, it has fallen sharply again from close to $110,000—a direct result of the stock market’s plunge. The cryptocurrency market nears an alarming $19 trillion “tipping point” adding to worries that it may contribute to financial instability. At the same time, the U.S. dollar has fallen to multi-year lows against other major currencies, indicative of the worsening economic fears.
Trump has taken to Twitter before to criticize and attack Fed policy, specifically the Fed’s position on interest rates.
"With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates, now,” - Donald Trump
Europe, he has said, has already cut interest rates seven times. This step now puts additional pressure on the Fed to follow suit. In fact, Trump has even threatened to fire Jerome Powell from his post as Fed Chair. This has only deepened the shock to markets, but economic advisor Kevin Hassett assures that firing Chairman Powell is on the table. Trump posted to his Truth Social account that "Powell’s termination cannot come fast enough."
So Jerome Powell’s been caught between a rock and a hard place. He cites business uncertainties born from Trump’s tariff trade war as a primary reason for his departure. The White House and the Federal Reserve have increasingly tussled over their conflicting views. Now, this conflict has exacerbated market volatility and contributed to overall investor uneasiness.
The damaging trade war that Donald Trump started continues to keep markets in turmoil. Now, once again, we might be facing a full-blown “U.S. dollar confidence crisis.” The stock markets have understandably responded very negatively, with Wall Street opening sharply low, led by the Nasdaq and big tech. Bitcoin’s inability to catch a bid with gold, the traditional safe-haven asset, highlights just how severe the market fear is.
Now, some industry experts and analysts are predicting catastrophic fallout should the Israel-Hamas war spin out of control.
"It would be a huge, huge shock,” - Lark Davis, a bitcoin and crypto investor, wrote in his Wealth Mastery newsletter
Billionaire investor Ray Dalio is raising the alarm in a big way. He thinks the U.S. is headed toward a financial crisis and recession that would be much deeper than 2008. Senator Elizabeth Warren has been sounding the alarm. She raises the prospect that Trump would attempt to fire Powell, forebodingly adding that “no one is safe.”
