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- Bitcoin (BTC) has proven its high correlation with political trends after reacting strongly to the report that US President Donald Trump may not fire Fed Chair Jerome Powell.
- Analysts have indicated that this demonstrates the strength of Bitcoin as a hedge against US Treasury risks.
Bitcoin (BTC) has staged a quick reversal to $93k from its daily low of $88k after “printing” impressive gains across three of its major trading sessions.
On its 24-hour price chart, the asset has surged by 6%, pushing its weekly and monthly gains to 12% and 8%, respectively. Interestingly, the enthusiasm within the market did not end with the price action as its daily trading volume surged by a staggering 51% to $57 billion. As mentioned in our previous news brief, the asset could continue this rally to hit $126k by June.
Reason for Bitcoin’s Bullish Reversal
Previously, we explored the rumours surrounding the replacement of Federal Reserve chair Jerome Powell. According to that report, US President Donald Trump described him as “too late and wrong” for refusing to cut interest rates. At that time, the governing council of the European Central Bank (ECB) had reduced interest rates by 25 basis points.
A Wall Street Journal post also disclosed that Trump is not happy with the Fed Chair. Fascinatingly, these reports caused the Bitcoin price to fall by 0.48% in 24 hours to trade at $84k.
Barely a week after these reports, Trump disclosed that he has no intention of sacking Powell. Instead, he expects to see him a little more active.
I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates.
Soon after this clarification, the equity index futures surged by 2%, while the crypto market, led by Bitcoin, witnessed the total valuation rise by 6% to $2.9 trillion. According to analysts, this demonstrates how BTC is highly correlated with global political and macroeconomic trends.
Commenting on this, Evercore ISI Vice Chairman Krishna Guha disclosed that while Powell’s replacement news has proven to have a significant impact on the market, positive statements by Trump also reduce the possibility of the worst outcome.
Whether this reflects Monday’s brutal foretaste of what would happen in markets if he did try to fire Powell, or was the plan all along, it is a clear positive. It materially reduces the likelihood of worst-case outcomes including stagflation and the morphing of the tariff crisis into a sovereign debt crisis, though these risks remain.
According to the Head of Digital Asset Research at Standard Chartered, Geoff Kendrick, Bitcoin’s recent reaction underscores its role as a hedge against US Treasury risk and Traditional Finance (TradFi).
Interestingly, its current trend also defies multiple bearish predictions, including the analysis of Economist Peter Schiff, which suggested that the asset may not survive the 2025 financial crisis, as noted in our earlier post.
