Trump seeks to fire Fed Chair Jerome Powell via the Supreme Court. Good news for the crypto market?

The Federal Reserve Chair Jerome Powell has been named one of the unluckiest Fed chairs as he has to deal with a terrible mess created by Donald Trump’s tariffs policy. Since Powell ignored Trump’s urges to cut interest rates, Trump decided to fire him via the Supreme Court. Let’s dive deeper into the nature of this conflict and figure out if Powell’s resignation would be good for crypto.

What led to the conflict?

First off, the Powell-Trump conflict is not new. The consistent leaning of Powell’s Fed towards keeping interest rates high to keep inflation in check has always been a problem for Trump. However, in December 2024, Trump said he would not try to make Powell go. However, it seems Trump has had enough this time.

Tariffs deployed on trading with dozens of countries on the so-called Liberation Day on Apr. 2, 2025, have seriously shaken the stock market around the globe. The crypto markets responded with 10 to 20 percent downfalls on Apr. 7. The same day, many stock markets saw the worst drops in value in decades. Crypto liquidations reached around $888 million on that day. 

American markets saw lower declines. Partly, this can be explained by the rumors of a possible 90-day pause on tariffs. The White House rejected the news as fake news, but later, it turned out that it was true, except for China. Instead, the U.S. deployed even harsher tariffs on China, raising it to 145% as of press time. The media called tariffs a “shock” for the economy and the markets.

The fear greed index has reached a strong “extreme fear” point following the Liberation Day and the following week. The situation began to look threatening for small businesses in the U.S., as Pershing Square CEO Bill Ackman vividly outlined in an X post shown below.

Donald Trump expressed no regrets about bombing the markets. In February, he even warned the public about the “pain” that tariffs may bring to Americans. He suggested that it is a reasonable price for the golden age of America to come. 

Nevertheless, the 90-day pause and the openness for negotiations with many countries, including China, changed the vibe. Some think that Trump deliberately wanted to scare other countries to make them negotiate on America’s terms. Others believe Trump capitulated to angered billionaires and investors. Either way, many don’t understand how the hurdles set for American companies with manufacturing operations in China can help America thrive.

On Apr. 10, it was revealed that the inflation rate in the U.S. dropped. Although Trump reacted to the news of declining inflation positively, he sought the interest rate cut as a remedy to the market’s shakeup. The decision should be made by the Fed, which is an independent agency. Jerome Powell, a chair of this independent agency, showed reluctance to cut the rates.

Powell vs. Trump

According to a recent WSJ article, Powell is facing a no-win situation in which he cannot make a perfect decision whether to cut the rates or not. Either way will cause harm to the economy. Rate cuts will unleash inflation while keeping the rates as they are ignoring the slowing down economy and letting the labor market fall, which in turn will cause inflation to surge anyway. 

Yet, Powell sees no reason to cut the rates and sticks to holding down inflation and tamping down the risks for the economy. On Apr. 4, he said that central banks should first assess the high-paced trade policy changes unleashed by Trump.

Seemingly, Donald Trump is not impressed with this contrariness, so he allegedly seeks to oust Powell through the Supreme Court. According to the Bloomberg report, Trump petitioned the Supreme Court to fire high-profile officials from two independent agencies. This could be a potential attack on Powell, who recently admitted that he would not resign until the end of his term.

If the Supreme Court dismantles the 1935 precedent set by Humphrey’s Executor vs. the United States case, Powell may end up being fired. The precedent increases the protection of his current position and saves him from firing by executive power. However, the precedent may be seen as conflicting with Article II of the Constitution, which Trump can use as legal grounds to terminate Powell.

Such an approach may be seen as Trump’s stunt to concentrate much power in his hands and decrease decentralization in the government. On the other hand, investors wishing for rate cuts may praise the move if it actually takes place.

Would the crypto market benefit from Powell’s resignation?

In December 2024, Powell announced a low interest rate cut, reversing the crypto bull run that was in full swing at that time. He was hardly seen as a crypto ally at that time. On other occasions, though, Powell has been supportive; for instance, he critiqued the debanking of the crypto clients by financial institutions. Earlier, the Fed signaled its intention to cut the rates in 2026, which would have paved the way for further Bitcoin adoption in the future.

Trump may try to nominate a more pro-crypto Kevin Warsh as Powell’s successor or find someone more submissive, who will cut the rates every time when he wants it. Lower interest rates may trigger inflation, which plays out well for Bitcoin in the short term. However, Trump’s overall crypto-friendly policies are already a bullish factor for Bitcoin, and bothering the Supreme Court to terminate Powell, who has been doing his work pretty well, just to cut the interest rates may not be a good move. Powell’s term ends in May 2026. Let’s just see what happens.