Trump Could Replace Fed Chairman Powell – How Will Bitcoin React?

US President Donald Trump has reignited the discussion about replacing Federal Reserve (Fed) Chairman Jerome Powell. This has caused waves in traditional and cryptocurrency markets, with Bitcoin preparing to reclaim the $105,000 mark.

These impacts are significant, affecting not only monetary policy but also the direction of Bitcoin, altcoins, and global macro risk sentiment.

Trump's Virtual Fed Chair Plan Shakes the Market

On 06/06, Trump indicated that his choice for the next Fed Chair would be announced soon, despite Powell's official term ending in 05/2026.

This move will create a political earthquake in monetary policy circles, with Trump preparing to install a waiting "ghost" Fed Chair.

Two months ago, when Trump first proposed firing Powell, the US Dollar Index (DXY) dropped sharply, pushing Bitcoin to surge. As BeInCrypto reported, Bitcoin rose strongly as the market priced in more accommodative monetary policy and declining confidence in the Fed's independence.

When Trump withdrew his intention in late 04, Bitcoin experienced a short-term correction, illustrating the cryptoasset's close connection to Fed credibility and Treasury policy.

"I have no intention of firing him... I want to see him act more aggressively in lowering rates," Reuters reported, quoting Trump speaking to reporters in the Oval Office on Tuesday.

Now, with Powell replacement talks resurging, Bitcoin is again showing volatility.

"This could shake the large market. It could trigger a cryptocurrency price surge or cause significant drops," said Rananjay Singh, founder of TodayCrypto.

Can Trump Fire Powell?

Legally, Trump cannot dismiss Powell from the Fed Chair position unless he finds legal loopholes. The Federal Reserve Act only allows removing a sitting Fed Chair "for cause," historically meaning ethical violations or serious misconduct.

However, Trump could nominate Powell's successor before the 2026 deadline, a strategy proposed by Scott Bessent of Key Square Capital.

"...the nominee will have to wait to chair the powerful Federal Open Market Committee, where one of the nation's most important interest rates are set... their guidance, prediction, and potential criticism of the Fed's actions will heavily impact financial markets," Jon Herold explained.

Bessent is also the US Secretary of the Treasury. Trump is reportedly considering whether to dismiss the Fed chair.

Despite legal loopholes, some say removing him without just cause would create legal and market chaos.

What a New Fed Chair Means for Bitcoin and Altcoins

Geoff Kendrick, Head of Digital Assets Research at Standard Chartered, recently told BeInCrypto that Bitcoin is no longer just an inflation hedge. Instead, it is now a hedge against traditional financial (TradFi) and Treasury risks.

"The threat of removing US Federal Reserve Chairman Jerome Powell falls into Treasury risk—so the hedge is being implemented," Kendrick told BeInCrypto.

With increasing monetary instability, Bitcoin is increasingly seen as a decentralized alternative to fiat-controlled systems. This is especially true during periods of political intervention.

"If 'Too Late' at the Fed will CUT, we will dramatically lower rates, long-term and short-term, on maturing debt. Biden primarily goes short-term. Virtually no inflation (anymore), but if it returns, RAISE 'INTEREST RATES' TO COUNTER. Very Simple!!! He is making our Country costly. Borrowing costs should be MUCH LOWER!!!" Trump wrote on Truth Social.

Trump feels the US will develop the economy better without Powell, sentiments emerging amid rising debt. In this context, experts suggest Bitcoin is a life raft. Based on this perspective, the pioneering cryptocurrency is striving to reclaim the $105,000 mark.

Meanwhile, the impact is not limited to Bitcoin. Altcoins, which have lagged in 2025 due to quantitative tightening (QT) and low rate cut expectations, might finally receive a positive signal to increase in price.

"This is the most important news for altcoin holders. The primary reason altseason was delayed was QT and few rate cuts. But this could change soon... the new Fed chair will certainly meet [Trump's] requirements. Altseason is coming," analyst Cas Abbé wrote.

A Trump-supportive Fed Chair might support aggressive rate cuts, loosen financial conditions, and create liquidity that drives cryptocurrency market price increases. However, potential risks remain.

"That day will be a global black swan event if it happens," the famous World of Finance account on X warns.

This move could trigger a new price surge or cause systemic shocks.