Trump-Fed Showdown Roils Bitcoin, Crypto, and Stock Markets

Donald Trump has increased his verbal attacks on the U.S. Federal Reserve and its chair, Jerome Powell, shaking confidence in bitcoin, cryptocurrency, and stock markets in 2025. The renewed tension follows recent predictions by Trump allies that he may take direct action in shaping the central bank’s policies.

The price of bitcoin climbed to a record high over the last month, with the entire cryptocurrency market growing to more than $4 trillion. Market observers say the “floodgates are starting to open” for crypto, as investor sentiment shifts. Meanwhile, Elon Musk has issued a $37 trillion warning, highlighting worries about the Federal Reserve’s influence over digital asset prices.

Larry Kudlow, a former top Trump economic advisor, told the New York Post that “President Trump’s going to take the Fed over, as he should.” This follows years of disagreement between Trump and Powell, with past criticism centered on interest rate hikes during Trump’s first term. Kudlow called previous disputes between the two “a sad tale,” adding that the arguments had unsettled financial markets.

As of September 15, Trump expects the Federal Reserve to announce a “big” interest rate cut, with financial markets largely betting on a 25 basis point drop. According to CME’s FedWatch tool, a larger move of 50 basis points is still possible, as the latest U.S. inflation rate stands at 2.9%, above the Fed’s target of 2%. In remarks reported by Bloomberg, Trump said, “I think you have a big cut… It’s perfect for cutting.”

Many analysts expect the Fed will focus on a slowing job market during its upcoming Federal Open Market Committee (FOMC) meeting. Bitcoin’s price has paused near $116,000, with traders waiting for the Fed’s announcement. Alex Kuptsikevich of FxPro stated by email that bitcoin is likely to respond to the Fed’s public stance, emphasizing that the “driver will be the tone of comments regarding the Fed’s future actions.”

The ongoing friction began when Powell called post-pandemic inflation “transitory” and resisted raising rates. Tensions increased in September 2024 when Powell raised rates by 50 basis points, an action some viewed as favoring political opponents. Earlier in 2025, Trump suggested removing Powell before his term ended, creating uncertainty over the Fed’s future independence. Speculation about Powell’s removal on the Polymarket prediction platform dropped from a high of 20% in July to about 5% more recently.

Recently, Trump attempted to dismiss Fed governor Lisa Cook and installed Stephen Miran, a bitcoin supporter, as a temporary Fed official. Market analyst David Morrison warned by email that “president Trump’s continued meddling in the [Fed’s] affairs…could end up being a far more serious issue.”

The Federal Reserve is widely expected to cut interest rates, aiming to address a slowing U.S. labor market. Investors believe that lowering rates will encourage economic activity. Since these developments, bitcoin climbed 5% in the past week, with traders reacting to what many see as a more favorable environment for cryptocurrencies if the Fed shifts to easier monetary policy.

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