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A public clash between former President Donald Trump and Federal Reserve Chair Jerome Powell is intensifying, raising concerns about political interference in monetary policy. Investors are speculating whether this pressure could accelerate rate cuts, potentially benefiting risk assets like Bitcoin in the short term. However, long-term instability could pose risks to crypto and other volatile markets.
- Legal protections under the Federal Reserve Act and Humphrey's Executor v. United States (1935) prevent Trump from firing Powell over policy disputes, but political pressure tactics (e.g., criminal referrals, hostile hearings) are escalating.
- Market analysts predict short-term crypto gains from rate cut speculation but warn long-term Fed instability could pressure risk assets, with Bitcoin potentially acting as a 'chaos hedge' against dollar weakness.
- Trump allies are exploring indirect methods to weaken Powell's authority, including congressional hearings and budget reviews, while traders now price in only two rate cuts in 2024 amid heightened uncertainty.
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