Economist Alex Krüger stated that Bitcoin investors have not yet factored in the possibility of a more accommodative monetary policy from the Federal Reserve, which will depend on whom U.S. President Trump nominates to replace Powell.
Bitcoin (BTC) traders view the potential for the Fed to cut rates for the first time this year in September as a positive sign, creating a more favorable market environment for Bitcoin. A suitable nominee for Fed Chair could further drive up Bitcoin prices.
Krüger posted on the X platform on Monday, saying, "I am highly confident that this cycle is not over yet, as I expect Fed policy to shift towards being more accommodative."
He mentioned, "This expectation will only begin to be reflected in market prices after Trump announces his nominee to replace Powell." Powell's term is set to expire in May 2026, and Trump has begun to propose a list of candidates.
The Federal Reserve primarily influences Bitcoin through monetary policy tools such as adjusting interest rates, affecting overall market sentiment, and influencing investor risk appetite.
According to a report by CNBC on Wednesday, the Trump administration has included 11 candidates under consideration to replace Powell.
The latest additions to the list include Jefferies Chief Market Strategist David Zervos, BlackRock Global Fixed Income Chief Investment Officer Rick Rieder, and former Fed Governor Larry Lindsey.
Other reports indicate that Trump has narrowed the list down to three to four candidates and may announce a replacement sooner than expected.
Since Trump took office, his relationship with Powell has been tense, with multiple public criticisms of the Fed's reluctance to cut rates and direct mentions of Powell.
On April 17, Trump stated, "The sooner Powell is fired, the better!" Meanwhile, Florida Senator Rick Scott also agreed with the president's view, stating, "The Fed needs new leadership."
Krüger expects the Fed to cut rates at the meeting on September 17.
The market generally agrees with this view; according to the CME FedWatch tool, 83.9% of market participants expect the Fed to cut rates.
On Friday, David Duong, Global Research Director for Coinbase's institutional business, stated that there is a significant amount of retail money still on the sidelines in money market funds, and the Fed's accommodative policy could stimulate broader retail investor participation in the medium term.
Related: Is the bottom for Bitcoin (BTC) price $114,700? Data suggests the reversal timing is here.
Original article: “Bitcoin (BTC) price action has yet to fully reflect expectations before Trump announces new Fed Chair”
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