2025-12-31 03:26:31

Recently, the crypto community has been paying close attention to an unavoidable topic—the tug-of-war over monetary policy in U.S. politics. Current President Trump has been pressuring Federal Reserve Chair Jerome Powell, and this political and economic game could directly influence the direction of the entire crypto market.

Let's look at Trump's actions first. He publicly threatened to sue Powell, citing the Fed's $2.5 billion renovation of its headquarters as "gross misconduct." But the real core demand is—lower interest rates. Trump explicitly asked the Fed to cut rates to around 1%, even saying "those who don't cut rates according to my plan don't deserve to be chairmen." This sounds quite aggressive, but behind it reflects a desire for an easy monetary environment.

What is the Fed's current stance? The interest rate is now held between 3.5% and 3.75%. Although it has been cut three times this year, recent meeting signals suggest only one more cut might happen in 2025. Powell's term as chair lasts until May 2026, and the board members' terms extend to 2028, so the policy direction in the short term remains quite uncertain.

For the crypto world, this situation is quite complex.

If rate cuts are truly implemented, it could be a positive signal. Loose liquidity tends to push funds toward high-risk, high-reward assets, making the crypto market a prime target for hot money, which could ignite a bull market. But the problem is, political interference and the resulting uncertainty could also bring another risk—market volatility might spike sharply. Historically, Bitcoin has experienced monthly declines of over 30% due to repeated rate cut expectations, triggering mass liquidations.

Structurally, altcoins and application-based projects that are sensitive to liquidity might benefit from a loose cycle. However, tokens lacking substantial backing are at greater risk, with dangers amplified.

A deeper hidden risk is that if the Fed's independence is truly shaken, long-term market uncertainty will only increase, which is bad news for any investor. The game between policy and money supply has always triggered significant market swings; sudden liquidity tightening or failed expectations can be devastating.

Currently, the key variable in the market is Trump's pressure on the Fed. His next moves could directly determine where funds flow and how the crypto market develops.

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ParallelChainMaxi

· 16h ago

Trump this guy is really something. He came out and played the rate cut card first, it feels like the Federal Reserve will have to compromise sooner or later. Powell's position is too difficult, caught between politics and the economy. I bet five bucks he will have to cut again before the end of the year. Honestly, rate cuts are a double-edged sword for the crypto world. Hot money flows in and a bull market starts, but the volatility is also ridiculously high. Protecting against liquidation is a hard skill. Those meme coins are probably doomed this time. Once liquidity issues arise, their true nature is immediately exposed. It's still better to hold BTC and assets with real utility. If the Federal Reserve's independence is truly compromised, the market will have no future. That's the most terrifying part.

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SatsStacking

· 16h ago

Another palace intrigue? Trump and Powell are clashing, and we retail investors just have to bet on expectations... Basically, it's about whether the rate cut will happen. If it does, the market will go up; if not, it will crash. Nothing new. The uncertainty this time is too high; it feels like we have to wait until next year to see the direction clearly. Political interference in the Federal Reserve's independence—this is the most terrifying long-term issue... 1% interest rate? Is Trump trying to print money forever? We small investors are caught between these two giants, getting beaten up. Historically, a 30% monthly drop is terrifying. Will it happen again this time... Liquidity easing and altcoins will definitely take off first, but the dumps will be the harshest. Ultimately, it's a bet on whether political uncertainty can be resolved. It's too early to place bets now.

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MetaMisfit

· 16h ago

Trump is causing trouble again, now the Federal Reserve has to be caught in the middle and feel uncomfortable. As retail investors, we are even more uncomfortable. Whether or not interest rates are cut, it's all about psychological warfare. How can the crypto market be stable? If altcoins can take off with liquidity this time, it would be a profit. The fear is false positive signals causing a sell-off. Instead of waiting for policies, it's better to keep an eye on your own positions. Don't get caught in the crossfire and get cut repeatedly. This political interference is basically planting landmines in the market; no one knows when they will explode.

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NFTRegretDiary

· 16h ago

Trump's move this time is really a gamble; rate cuts have become a feast, and if it fails, the crypto market will be bloodbath. To put it simply, politicians are playing with money, and retail investors have to keep up with the heartbeat... This time, I really don't know whether to go all in or stay in cash; it feels like a reversal could happen at any moment. How long can Powell hold on? It seems the independence of the Federal Reserve is gradually eroding... Actually, the biggest fear is this kind of uncertainty, which is more uncomfortable than direct bad news. Altcoins should surge if they are to take off, but be prepared for a 30% drop in value.

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GweiTooHigh

· 16h ago

With Trump's antics, how uncomfortable must Powell be haha, the crypto circle has directly become a pawn in political struggles Cutting interest rates is a good thing, but this uncertainty is truly extreme, no different from gambling The Federal Reserve's independence is gone, how can our market operate, feels like it's going to explode Is there an opportunity with these altcoins? Or is it safer to stick with mainstream coins Political interference in monetary policy, I've seen too many crashes like this in the crypto world The Fed needs to hold on, don’t let Trump’s combination punches defeat it Capital flows are influenced by political appearances, it's too absurd, just buy gold instead If I were to say, when the rate cut expectations are being hyped, you should run quickly, the risk points are too many Powell is now caught in the middle, really a bit miserable Cut to 1%? How crazy would that kind of loose monetary policy be, where will the coin prices soar to then Anyway, from now on, keep an eye on Trump's mouth, one sentence could determine the market

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