Trump Threatens to Fire Jerome Powell, Creating Uncertainty in Financial Markets
The economic climate in the United States is darkening as tension between the White House and the Federal Reserve intensifies. While Bitcoin remains stable around $85,000, investors are questioning how far Donald Trump will go in his confrontation with Jerome Powell, the Fed’s president.
A Power Struggle that Threatens the Independence of the Fed
Donald Trump is reportedly considering firing Jerome Powell. The Wall Street Journal has suggested that former governor Kevin Warsh is being considered as a replacement. However, even Warsh himself advised the president not to cross this red line. Treasury Secretary Scott Bessent also fears turmoil in already fragile markets. The message is clear: tampering with the Fed undermines its legitimacy and independence, both pillars of American financial stability.
Jerome Powell, on the other hand, remains steadfast. Despite Trump’s harsh criticism of his monetary policy and opposition to tariffs, Powell reaffirms his commitment to see through his term until May 2026. He insists that price control is the priority in the face of stagflation threats.
The Return of Stagflation
Concerns are mounting with the release of the Philadelphia Fed’s manufacturing index, which has sharply dropped to -26.4, its lowest level in two years. At the same time, the index of prices paid is rising, fueling fears of a stagflation scenario — low growth and persistent inflation.
This toxic cocktail is exacerbated by Trump’s protectionist policies, which reignite trade tensions through increased tariffs. This risky choice comes as Europe is attempting to stimulate activity by once again lowering interest rates for the seventh consecutive time.
Bitcoin Takes a Pause, but Options Explode
In this uncertain environment, Bitcoin shows relative resilience. The flagship cryptocurrency fluctuates between $83,000 and $86,000. While volatility remains contained, options traders on Deribit show signs of unease.
Bullish positions are growing, particularly for calls at $90,000 and $100,000 expiring in May or June. Some finance these optimistic bets by selling puts and collecting premiums. However, others are hedging their positions with purchases of $80,000 puts for April. This cautious strategy is in response to a climate where Wall Street’s fear index, the VIX, remains significantly above average.
A Market Hanging on Political Decisions
While Bitcoin benefits slightly from its position as a digital safe haven, it is not immune to market logic: political uncertainty weighs on it. The specter of Powell’s dismissal, combined with concerning macroeconomic signals, could cause further disturbances.
Beneath the apparent stability, tension is palpable. The immediate future of Bitcoin, as well as the US markets, will depend on both Powell’s speeches and Trump’s decisions.
