Trump’s Challenge to Fed Independence: Powell Termination Threat Sends Bitcoin Above $87,600

TLDR

Bitcoin ETFs saw $15.85 million in weekly inflows, breaking a two-week outflow streak Trump threatened to terminate Fed Chair Jerome Powell after Powell warned about tariff impacts Bitcoin price rallied past $87,600, up 16% since early April Fed Chicago President Goolsbee warned that removing Powell would “undermine the credibility of the Fed” The US Dollar weakened against major currencies as markets reacted to the Powell controversy

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President Donald Trump’s threat to terminate Federal Reserve Chairman Jerome Powell has sent ripples through global markets, with Bitcoin surging and the US dollar weakening against major currencies.

The confrontation began after Powell criticized the economic impact of Trump’s tariff policies, warning they would lead to “higher inflation and slower growth.”

Bitcoin has climbed more than 16% since April 9, reaching over $87,600 early Monday. This rally comes as spot Bitcoin ETFs in the United States recorded net inflows of $15.85 million for the week, breaking a two-week outflow streak that had seen $886 million leave the funds.

Powell’s Warning and Trump’s Response

The dispute erupted after Powell’s speech at the Economic Club of Chicago on Wednesday, where he cautioned that “the level of tariff increases announced so far is larger than anticipated” and would have negative economic consequences. Trump fired back on social media the following day, writing that “‘Too Late’ Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!'” He added, “Powell’s termination cannot come fast enough!”

This direct challenge comes despite a nearly 100-year-old Supreme Court precedent from the Roosevelt era that limits a president’s power to remove heads of independent agencies without just cause such as neglect or wrongdoing. Powell himself has expressed confidence in his position, stating when asked if he would leave at Trump’s request: “No.”

Trump appointed Powell in 2017 but has consistently criticized his decisions on interest rates. Reports have emerged that Trump might replace Powell with Kevin Warsh, a former Fed official known for pro-crypto views.

Market Reactions

The effects on financial markets were immediate. After an initial dip that saw Bitcoin ETFs lose $169.87 million on Wednesday following Powell’s speech, sentiment reversed on Thursday after Trump’s comments, bringing $107.83 million back into the funds.

BlackRock’s IBIT led the inflows with $186.5 million, followed by Bitwise’s BITB with $23.8 million. However, Fidelity’s FBTC and ARK’s ARKB saw outflows of $174.9 million and $99.8 million respectively.

Bitcoin Price on CoinGecko

Dollar Weakness

The US dollar weakened against almost every major currency on Monday as investors considered the implications of Powell’s potential dismissal. The euro and Swiss franc were among the biggest gainers, with the euro reaching a three-year high against the dollar.

Win Thin, global head of markets strategy at Brown Brothers Harriman & Co., wrote: “We believe dollar weakness will continue. The attack on Fed independence is intensifying. The admission that this is being studied at all should be taken very seriously and very negatively.”

The US Dollar Index has dropped 10% this year amid growing global trade tensions, benefiting both Bitcoin and gold as alternative stores of value.

Chicago Fed President Austan Goolsbee expressed concern about the situation on CBS’s “Face the Nation,” saying: “I strongly hope that we do not move ourselves into an environment where monetary independence is questioned. Because that would undermine the credibility of the Fed.”

– Tech futures down
– Dollar down
– Gold new ATH
– Bitcoin breaking out/decoupling

Realize where we are. pic.twitter.com/XqZRlEHj39

— Geiger Capital (@Geiger_Capital) April 21, 2025

Goolsbee noted there is “virtual unanimity” among economists that the Fed should maintain independence from political interference, based on observations of countries without monetary independence.

Some experts question whether Fed independence is legally protected or merely a norm. Itay Goldstein, finance department chair at the University of Pennsylvania’s Wharton School, told Fortune: “Laws also depend on people and who they are, how they interpret them, and what they’re willing to do.”

Bitcoin’s price action shows a potential decoupling from traditional markets, according to analysts at Geiger Capital. They noted that BTC has broken out of a large falling wedge pattern that formed since early 2025, which often signals sustained gains ahead.

The cryptocurrency is now just 20% away from its all-time high, with investor sentiment turning increasingly bullish despite ongoing uncertainty in traditional markets.

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