Trump issues ultimatum to Fed chair as Bitcoin trembles at $75,000. ‘I’ll have to fire him’

Bitcoin is trading around $74,699, up 0.8% on the day, as investors weigh a potential Federal Reserve leadership change in May. Trump threatened to fire Jerome Powell if he stays after his term ends, while analyst Thomas Perfumo argues Kevin Warsh’s possible confirmation could favor genuine rate cuts and add liquidity support for risk assets. Markets are still pricing only a 1.6% chance of a June rate cut, leaving crypto sensitive to the Fed transition and the ongoing probe into Powell’s exit.

Analysis

The market is underpricing a regime shift in the Fed’s reaction function, not just a personnel change. If a new chair is perceived as more willing to ease, the first-order move is lower front-end yields, but the second-order winner is duration-sensitive beta: unprofitable tech, small caps, and crypto all benefit from cheaper discount rates and higher liquidity expectations. The key point is that the trade is anticipatory; prices often move on confirmation risk long before actual policy changes.

The biggest near-term catalyst is the confirmation process, because it can re-rate policy expectations without a single basis point move in the funds rate. If the nominee is framed as aggressively dovish, the market will likely pull forward easing expectations and compress real yields; if confirmation is delayed, the market may temporarily discount the whole easing narrative and unwind speculative longs. That creates a convex setup where downside is limited by already-elevated caution on rates, while upside can accelerate quickly if leadership risk is resolved.

The contrarian view is that the bullish crypto consensus may be too simplistic. A friendlier chair does not guarantee immediate easing if inflation data re-accelerates or if the new leadership prioritizes balance sheet restraint over cuts; in that case, the “liquidity impulse” may be slower and less potent than traders expect. Also, if political pressure undermines Fed credibility, the market could demand a higher term premium in the long end even as the front end rallies, blunting the benefit to risk assets.

For crypto specifically, the best expression is not outright spot chasing after the recent run, but using rate-sensitive proxies and optionality into the hearing and June meeting window. The setup favors tactical positioning into event risk, with the clearest edge in assets that respond to declining real yields and easier financial conditions rather than those dependent on immediate policy action.

Key Decisions for Investors

• Buy BTC call spreads dated after the April 21 hearing and before the June FOMC, targeting a continuation if the market starts pricing a more dovish Fed chair. Use spreads to cap premium bleed given elevated implied vol and event risk.
• Go long IWM vs short XLU as a rate-sensitive pair trade for the next 4-8 weeks. Small caps should outperform defensives if front-end yields fall, with the trade protected by the fact that utilities already discount a lower-rate backdrop.
• Initiate a tactical long in ARKK or QQQ on weakness into the confirmation window, with a stop if the 2-year yield stops falling or if hearing testimony signals policy orthodoxy. This is a duration trade, not a fundamental earnings trade.
• For a cleaner macro hedge, short TLT puts or buy put spreads if the Fed leadership transition becomes politicized enough to lift term premium rather than lower real rates. This protects against the market misreading dovish rhetoric as unambiguously bond-positive.
• Avoid chasing spot BTC after sharp up days; prefer buying pullbacks or using call spreads because the upside is tied to policy headlines, while the downside if confirmation is delayed is a fast de-risking across crypto beta.