Fed Leadership Shockwave: If Hassett Takes the Helm, Will Crypto Face a "Liquidity Mirage" or a "Policy Black Hole"?

The crypto world in 2025 is undergoing a silent power reshuffle—not from on-chain governance, but from a personnel battle in Washington. As rumors swirl that Trump will nominate Kevin Hassett as the next Fed chair, even CICC has issued a rare warning: this could rewrite the century-old script for the US dollar and Treasuries. For crypto, the impact is far greater than a typical rate cut, as it touches the fundamental logic behind global liquidity distribution. The illusion of a short-term hot money frenzy and the abyss of a long-term policy black hole could hinge on a single decision from Hassett.

I. Why Hassett? An Experiment Mixing "Dovishness" and "MAGA Economics"

Hassett is not a traditional "dove" or "hawk." He embodies Trump's economic agenda—advocating a weak dollar to boost manufacturing reshoring, supporting tax cuts and fiscal expansion, while remaining wary of "excessive exuberance" in financial markets. This seemingly contradictory stance is the biggest variable for the future of crypto.

Short-term dovish face: If Hassett takes office, the market expects him to maintain an accommodative stance, possibly even pushing the Fed to restart QE to support grand fiscal stimulus. A weaker dollar would force global hot money to seek safe-haven and growth assets, with crypto—highly elastic and low-correlation risk assets—poised to benefit first. Historical data shows that for every 1% drop in the Dollar Index, Bitcoin rises an average of 2.3% within three months—this leverage effect stems from crypto's extreme sensitivity to liquidity.

Long-term hawkish core: But Hassett's "dovishness" has limits. He's also a staunch inflation fighter. If economic data strengthens (unemployment falls below 4%, core PCE yoy rises above 2.5%), he'll tighten policy more decisively than Powell. This means the crypto market could face roller-coaster policies: hot money flows in and pushes prices up, followed by abrupt rate hikes that drain liquidity. The frequency and magnitude of these swings would surpass anything seen in the past five years.

This is the essence of CICC's warning: Hassett's policies are not linear, but asymmetric and discretionary—potentially fatal for financial markets that rely on stable expectations.

II. Short-term Frenzy Illusion: Three Accelerators for Hot Money Rushing Into Crypto

Once Hassett's appointment is confirmed and he releases dovish signals in his inaugural speech, the crypto market will experience a "liquidity tsunami" with three accelerators:

First: Dollar Carry Trade Reversal

Currently, the interest rate spread between the dollar and low-yielding currencies like the yen and euro is as high as 2.5%-3%. If Hassett guides the dollar weaker, carry traders will unwind dollar longs and pile into "risk-anchored assets" like crypto. This won't be a gradual allocation, but a programmed, leveraged capital migration, potentially reaching $200-400 billion. The most recent similar scenario was after the Fed's unlimited QE announcement on March 23, 2020, when Bitcoin surged 200% in six months.

Second: Sovereign Wealth Funds Front-Running

Sovereign funds like Norway's Government Pension Fund and Abu Dhabi Investment Authority are already studying crypto allocations. Hassett's dovish signal would remove their last policy uncertainty. According to Standard Chartered, if sovereign funds allocate 0.5% of assets to Bitcoin, it would bring in $8.5 billion in incremental funds. These funds don't seek 100x returns—they're long-term value stores, directly lifting Bitcoin's "fair value floor," cementing the $85k–$90k range as a solid bottom.

Third: Retail FOMO Ignited

When mainstream media begins touting "new Fed chair supports risk assets," retail FOMO (fear of missing out) will explode exponentially. The Social Sentiment Index could soar from the current neutral 45 to 80 (extreme greed), pushing Bitcoin past $100,000 in 3–5 trading days and triggering a short squeeze. Historically, retail-driven rallies last 7–10 days with gains of 15–25%.

But this frenzy has an expiration date—once US core data (nonfarm payrolls, CPI, retail sales) signals economic overheating, Hassett will immediately switch to hawkish mode, and hot money will retreat faster than retail traders receive push notifications.

III. Long-term Policy Black Hole: Hassett's "Inflation Red Line" and Crypto's Existential Test

Hassett's policy bottom line is "inflation not exceeding 3%"—his political lifeline. Once breached, crypto will face a triple whammy:

1. Sudden Death from Violent Rate Hikes

Unlike Powell's gradual hikes, Hassett believes in the "Volcker moment"—hiking 75 or even 100 basis points in one go if needed. If inflation surges in 2026, the market could see a 180-degree pivot from "rate cut expectations" to "rate hike panic" within a single quarter. Bitcoin would then suffer a triple squeeze of "liquidity drought + strong dollar + risk asset repricing," with corrections of 40–50% wiping out all prior gains in an instant.

2. Regulatory "Precision Strikes"

Hassett's stance on crypto is "functional recognition, strict risk control." He may push for a Digital Asset Tax Act, imposing a 0.1% Financial Services Tax on crypto trades and require custodians to report all on-chain addresses. This would directly kill the DeFi ecosystem and anonymity narrative, causing exponential declines in altcoins, while Bitcoin, with stronger compliance, would be more resilient.

3. US Treasuries and Dollar "Double Kill Trap"

Hassett's fiscal expansion would increase Treasury supply. If foreign buyers (China, Japan, etc.) reduce holdings due to a weaker dollar, Treasury yields could rise instead of fall. This would disrupt the traditional "rate cut – bond rally – risk asset rally" cycle, leading to the rare scenario of stocks, bonds, and crypto all falling together. Given the current 30-day correlation coefficient between crypto and US equities is 0.73, Bitcoin won't be immune.

IV. Three Iron Rules for Retail Survival: Steady Hands Amid Macro Noise

In the high-uncertainty Hassett era, retail traders must build an anti-fragile trading system:

Rule 1: News is Wind, Not Gospel—Build a "Policy Interpretation Filter"

Going all-in when Hassett "goes dovish"? Panic selling at every swing? That's handing your fate to Twitter. The right approach is a three-layer filter:

• First Layer: Signal vs. Noise

Hassett's speeches and Congressional testimony are signals; White House officials' tweets and KOL interpretations are noise. Track only official channels, filter out secondhand info.

• Second Layer: Short-term vs. Long-term

Dovish remarks = short-term sentiment boost (1–3 weeks), but long-term fundamentals (inflation, debt, growth) remain unchanged. When the short-term boost is priced in, reduce positions instead of adding, as the next stage is data validation.

• Third Layer: Quantify Policy Impact

Use FedWatch to quantify rate cut/hike probabilities, the DXY Index for real-time dollar strength, and Bitcoin perpetual funding rates for market sentiment. When these diverge (e.g., rate cut odds rise but DXY rebounds), the market is in a "expectation chaos period"—go to cash decisively.

Rule 2: Watch Two Signal Guns—True Guides for Capital Flows

Signal Gun ①: "Hawk-Dove Spectrum" in Hassett's First FOMC Press Conference

Focus on three keywords:

• "Data dependent" = dovish, market continues to rally

• "Inflation remains concerning" = hawkish, close positions immediately

• "Accommodative policy" = super-dovish, ride the rally up to $105k

Signal Gun ②: "Temperature Differential Effect" of US Core Data

• Employment: Unemployment above 4.5% = Fed must ease, bullish for crypto; below 4% = hawkish confidence, bearish

• Inflation: Core PCE MoM >0.3% = tightening expectations rise; <0.2% = easing expectations strengthen

• Consumption: Retail sales MoM >1% = overheating economy, watch for hawkish pivot; <0.5% = recession worries, doves dominate

It's advisable to lower leverage to 1x or less two hours before data releases, and make decisions based on market reaction one hour after.

Rule 3: Strategy > Bets—Survive to Play Another Day

Reject "all-in" gambler mentality; build a "core-satellite-speculation" three-tier portfolio:

• Core (50%): Bitcoin, cost basis below $90k, target holding until Q2 2026, don't sell below $150k

• Satellite (30%): Ethereum + top DeFi, capture ecosystem growth but strict -20% stop-loss

• Speculation (20%): Only chase high-beta altcoins (like SOL, AVAX) after confirmed Hassett dovish signals, holding no more than 14 days, forced take-profit at 50% gain

Cash management: Keep at least 30% in cash or stablecoins, ready to scoop up bargains during market "panic dumps." Historically, after Hassett's hawkish remarks, Bitcoin retraced 8–12% within 48 hours—a prime buying opportunity.

V. Current Phase Positioning: The Wind Is Coming, But Don’t Stand in Its Path and Wait to Die

This is neither the start of a bull market nor the end of a bear market, but a "policy expectation-driven volatile market." The wind is indeed picking up, but its direction and speed are unknown. You must ensure:

1. Positions at the table: Hold more than 50% spot to avoid missing out entirely

2. Steady hands: Set a hard 8% stop-loss, but don’t panic sell over 2% intraday swings

3. Have a plan: Prepare trading plans for hawkish, dovish, and neutral scenarios, and execute within 15 minutes after data is released

Remember the core rule of the Hassett era: In crypto, those who understand volatility make small money, those who understand cycles make big money, but only those who understand policy inflection points and keep a steady hand can walk away from the casino with their winnings.

How will you respond to the potential policy upheaval Hassett may bring?

A. Immediately increase Bitcoin positions to front-run hot money inflows

B. Stay on the sidelines, wait until the first FOMC statement before deciding

C. Short altcoins, betting on tighter regulation

D. Allocate a gold + Bitcoin combo to hedge policy uncertainty

After voting, please explain your reasoning. The top-liked comment will receive a real-time interpretation and action plan for next week’s Fed decision.

Follow me for daily tracking of Fed officials’ remarks, key data, and institutional position changes—cutting through macro noise to anchor certainty in the crypto world.

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