Trump Plans to Replace Powell with Kevin Warsh — The Fed May Face Major Controversy

#Trump #Powell #KevinWarsh

According to The Wall Street Journal, since taking office, Donald Trump has been privately discussing removing Federal Reserve Chairman Jerome Powell. In his most recent public remarks, Trump’s dissatisfaction with Powell has become increasingly explicit. Here’s a summary of Trump’s recent moves:

April 14: U.S. Treasury Secretary Bessent stated that he and Trump have been “actively considering” candidates for the next Fed Chair and plan to begin interviews in the fall.
In a meeting at Mar-a-Lago, Trump discussed with former Fed Governor Kevin Warsh the possibility of firing Powell before his term ends and potentially appointing Warsh as his replacement.
April 17: During an Oval Office meeting, Trump claimed he believes he has the authority to remove Powell: “If I want him out, he’ll be out very soon. Believe me.”
On the same day, Trump slammed Powell three times, calling him “always late and wrong”, accusing him of “playing politics” and “being terrible”. Trump again pressed for rate cuts, arguing that Powell “should have lowered interest rates long ago like the ECB” and urged him to “resign as soon as possible.”

Although Trump has yet to make a final decision about removing Powell before his term ends next year, he has said that any such action would likely go to the Supreme Court. This casts a shadow over Powell’s future at the Fed, and any move to remove the central bank chief over policy disagreements could shake financial markets.

Supreme Court Ruling May Affect Powell’s Tenure

Prominent financial analyst Jim Bianco believes Powell faces two possible outcomes: either he is directly dismissed by Trump, or his authority is undermined by a nominee who publicly counters him.

A critical moment may come as soon as May. The U.S. Supreme Court is expected to rule on a case brought during the Trump administration concerning whether a president has the authority to fire heads of independent federal agencies. This case is considered a “trial balloon,” and its outcome could provide Trump with a judicial basis to intervene further in the Fed — or even directly remove Powell.

Currently, the Federal Reserve Act stipulates that the Fed Chair can only be removed “for cause.” But if the Supreme Court overturns the Humphrey’s Executor precedent, legal protections for the Fed Chair would be greatly weakened, giving the White House significantly more power.

In other words, if this historic ruling comes to pass, Trump may be able to reshape the Fed’s leadership without much procedural resistance.

In response, on April 16 Powell emphasized the Fed’s independence as “grounded in law, not politics.”
He added: “Regardless of the political climate, the Fed will continue to uphold its responsibilities, maintain price stability, and preserve the independence of the financial system. We will not bow to political pressure.”

What Happens to the Crypto Market if Powell Is Removed?

Bottom line: It’s likely bullish — especially for Bitcoin (BTC) and other digital assets. Here are several potential impacts:

1. Interest Rates and Bitcoin Price Volatility

Crypto markets — particularly Bitcoin — are closely tied to monetary policy. If Powell’s successor adopts a looser monetary stance or cuts rates quickly, it could drive capital into risk assets like Bitcoin.

Rate cut expectations: A more dovish Fed would mean increased liquidity, pushing crypto prices higher — especially for mainstream assets like BTC and ETH.
USD depreciation: Rate cuts may weaken the dollar, prompting investors to turn to crypto as a hedge, further boosting prices.

2. Policy Uncertainty and Market Volatility

Powell’s departure and Trump’s potential intervention would inject policy uncertainty into U.S. financial markets. The crypto market is especially sensitive to regulatory signals.

Political pressure: If Powell’s successor leans toward stricter crypto regulation, it could spook the market and trigger capital outflows.
Market unease: Uncertainty can fuel anxiety about future economic and policy directions, prompting investors to flock to “safe havens” like gold — or increasingly, crypto.

3. Changing Fed-Crypto Dynamics

Powell’s exit could mark a shift in the Fed’s relationship with the crypto sector. Though not crypto-friendly, Powell maintained a restrained, neutral stance — neither pushing heavy regulation nor supporting aggressive adoption.

A politically motivated successor might abandon this neutrality. If Trump’s administration adopts a pro-DeFi or pro-crypto posture (as suggested by recent actions), it could unlock tailwinds for the industry.

Crypto regulation: Trump may prefer a lighter regulatory touch for crypto, fostering an environment more conducive to blockchain innovation. A friendlier Fed could open new doors for the crypto sector.
CBDC competition: On the other hand, if a new Fed Chair pushes hard for a central bank digital currency (CBDC), crypto could face tougher oversight — especially stablecoins and DeFi protocols.

4. Global Confidence in Bitcoin

Global investor sentiment toward Bitcoin often hinges on central bank behavior. A leadership change at the Fed, especially if accompanied by dovish monetary policy, could boost global confidence in Bitcoin as a store of value.

Conclusion

Whether Powell remains Fed Chair is more than a personnel issue — it’s a major narrative shift for crypto. If Trump reshapes the Fed, crypto assets could benefit not only from easier monetary conditions, but also from gaining new legitimacy as part of a shifting global financial trust system.

Crypto markets are increasingly tethered to traditional financial policy. Powell’s potential ousting might bring volatility — but also opportunity. Investors should closely monitor policy developments and prepare for market swings.

Ultimately, Powell’s fate will become a global focal point in the coming months — and may serve as a new “weathervane” for crypto market direction.