Original | Odaily Planet Daily (@OdailyChina)

Author | Ethan (@ethanzhangweb3)_

On the morning of September 12, Beijing time, the U.S. federal funds rate market released a highly clear signal: the probability of the Federal Reserve cutting interest rates by 25 basis points at this month's meeting has reached 93.9%. After five consecutive meetings of "holding steady," the market has finally welcomed a directional shift in monetary policy. At the same time, another gamble related to the future direction of the Federal Reserve over the next two years is quietly advancing: Who will succeed Powell as the next Federal Reserve Chair?

As of the same day on the decentralized prediction platform Polymarket, current Fed Governor Christopher Waller is leading with a 30% probability, ahead of the other two "Kevin faction" competitors—Hassett (16%) and Walsh (15%). However, the market also retains a more dramatic possibility: the probability that "Trump will not announce a successor before the end of the year" remains the highest at 41%.

This series of data indicates that the market is simultaneously betting on two directions: one is the consensus path of interest rate cuts, and the other is the still uncertain battle for the monetary helm. And between these two, Waller's name repeatedly appears in various trading perspectives and policy games.

Why has the market begun to "believe in Waller"?

The story of a "non-typical Fed Governor": How a small-town professor was pushed to the forefront?

Waller's background and experience seem out of place within the Federal Reserve system. He is not from an Ivy League school and has not held key positions at Goldman Sachs or Morgan Stanley; he was born in a small town in Nebraska with a population of less than 8,000, starting from Bemidji State University where he earned a bachelor's degree in economics. In 1985, he obtained a Ph.D. in economics from Washington State University and began a long academic career, teaching and researching at Indiana University, the University of Kentucky, and the University of Notre Dame for a total of 24 years.

After that, he spent 24 years in academia researching monetary theory, focusing mainly on central bank independence, term structures, and market coordination mechanisms. It wasn't until 2009 that he left academia to join the St. Louis Fed as the research director, and in 2019, he was nominated by Trump to the Federal Reserve Board. This nomination process was controversial, and the confirmation process was not smooth, but ultimately on December 3, 2020, the Senate confirmed his appointment by a narrow margin of 48:47. Entering the highest decision-making body of the Federal Reserve at the age of 61, Waller is older than most governors, but this has become an advantage; he carries fewer burdens, owes no favors to Wall Street, and having spent time at the St. Louis Fed, he knows that the Federal Reserve is not a monolith—different voices are not only tolerated but sometimes encouraged.

This path has allowed him to possess both professional judgment and the ability to express himself freely without being categorized as a spokesperson for any particular faction. From Trump's perspective, such a figure might be easier to "use"; and from the market's viewpoint, such a candidate signifies "less uncertainty."

However, in a power transition game intertwined with bureaucracy and political will, Waller is not the kind of candidate who is naturally favored by the market. His career trajectory is relatively academic and technical, not known for public rhetoric, nor has he frequently appeared on financial television.

Yet, this very person has gradually become a frequently mentioned "consensus candidate" in various market tools and political commentary. The reason lies in his triple compatibility:

First, a flexible monetary policy style, but not speculative.

Waller is neither a typical "inflation hawk" nor a proponent of easy money. He advocates that policy should move with economic conditions: supporting preemptive rate cuts in 2019; favoring rapid rate hikes to curb inflation in 2022; and in 2025, amid economic slowdown and falling inflation, he became one of the first Fed governors to vote for rate cuts. This "non-ideological" policy style stands out as scarce in the current highly politicized Federal Reserve landscape.

Second, clear political relationships and an extremely clean technical image.

Waller was nominated to the Federal Reserve Board by Trump in 2020 and is one of the few monetary policy officials within the Republican system who can achieve "technical neutrality" and "political compatibility." He is neither seen as "Trump's confidant" nor rejected by the party establishment, and this unique middle positioning gives him broader political maneuvering space amid fierce partisan competition.

Unlike the clearly positioned and strongly aligned Hassett, and in stark contrast to Walsh's close ties with Wall Street, Waller exhibits a more pure technocratic quality. He is more easily viewed as "a trustworthy professional," and in the context of highly polarized American politics, this de-ideologized, professionally capable image makes him a stable and easily accepted appointment candidate.

Third, his attitude towards crypto technology shows a degree of "tolerance" within the system.

Waller is not a so-called "crypto believer," but he is one of the most vocal figures within the Federal Reserve system on topics such as stablecoins, AI payments, and tokenization. He does not advocate for government-led innovation and opposes CBDCs, but supports private stablecoins as tools for improving payment efficiency, suggesting that "the government should build the infrastructure like building highways, leaving the rest to the market."

In the space between traditional finance and digital assets, compared to the other two candidates, he may be the only Federal Reserve official clearly signaling "public-private collaboration."

Instinct and Sense of Timing: He knows when to speak and when to stay silent

In July of this year, the Federal Reserve held its summer FOMC meeting. Although the market generally expected to "maintain interest rates," the meeting ultimately featured a rare scene: Waller and Michelle Bowman cast dissenting votes, advocating for an immediate 25 basis point rate cut.

Such a "minority dissent" is not common within the Federal Reserve. The last similar occurrence was in 1993.

Two weeks before the vote, Waller had already released his stance at a central bank seminar at New York University. His public remarks clearly advocated that "current economic data supports a moderate rate cut." On the surface, this was a technical "advance communication"; but in terms of timing, it was a release of a political signal. At that time, Trump had been ambivalent towards Powell, previously attacking him on Truth Social, demanding "immediate rate cuts." Waller's vote and speech neither fully aligned with the president nor provided cover for Powell. He skillfully positioned himself between "policy adjustment" and "technical independence."

In a highly politicized Federal Reserve environment, this ability to gauge the situation and know when to express opinions makes him appear more leader-like.

Trump criticized Powell for "poor and incompetent" management of the Federal Reserve building.

How should the crypto market react if he takes office?

The crypto market's interest in "who will lead the Federal Reserve" is not merely peripheral gossip, but a triple reflection of policy expectations, market sentiment, and regulatory pathways. If Waller indeed ascends to the chair, we need to seriously consider how three types of roles will reprice the future.

First, for stablecoin issuers and compliant pathways, it represents a large-scale opening of the "regulatory dialogue window."

Waller has repeatedly expressed opposition to central bank digital currencies (CBDCs) in his speeches, stating that they "cannot solve the market failures of the existing payment system," and instead emphasizes the advantages of private stablecoins (such as USDC, DAI, PayPal USD, etc.) in improving payment efficiency and cross-border settlements. He stresses that regulation should come from "Congressional legislation rather than agency expansion," calling for "these new technologies should not be stigmatized."

This means that if he becomes chair, projects like Circle, MakerDAO, and Ethena are likely to enter a "period of institutional path certainty," no longer constantly caught in the gray area between the SEC and CFTC. More importantly, Waller's idea of "market-led, government-built" may prompt the Treasury, FDIC, and other supporting agencies to collaboratively develop a regulatory framework for stablecoins, promoting policies of "licensing, reserve standardization, and information disclosure standardization."

Second, for main chain assets like BTC and ETH, it serves as a "sentiment boost + regulatory easing" mid-term umbrella.

Although Waller has not publicly praised Bitcoin or Ethereum, he stated in 2024: "The Federal Reserve should not take sides in the market." This succinct statement implies that the Fed will not actively "suppress non-dollar systems," as long as they do not touch on payment sovereignty and systemic risk bottom lines.

This will provide BTC and ETH with a "relatively mild regulatory cycle" window. Even if the SEC may still question their securities attributes, if the Federal Reserve does not aggressively push for CBDCs, does not block crypto payments, and does not intervene in on-chain activities, then market speculation and risk appetite will naturally improve.

In simple terms, in the "Waller era," Bitcoin may not receive "official endorsement," but will benefit from a natural easing of regulatory pressures.

Third, for developers and DeFi native innovators, it represents a rare window of "dialogue with the central bank."

Waller has mentioned "AI payments," "smart contracts," and "distributed ledger technology" on multiple occasions this year, stating: "We may not adopt these technologies, but we must understand them." This stance is in stark contrast to many regulators who avoid or belittle crypto technology.

This opens an extremely important space for developers: they are not necessarily required to be accepted, but at least they are no longer excluded.

From Libra to USDC, from EigenLayer to Visa Crypto, generations of developers have found their communication with central bank regulators stuck in an "awkward parallel universe." If Waller takes office, the Federal Reserve may become the first central bank leader "willing to engage in dialogue with DeFi natives."

In other words, crypto developers may welcome a moment of "policy negotiation rights" and "financial discourse rights."

Conclusion: Predictive trading prices the future, chair candidates price the direction

Whether "Waller will be the new chair" is still undecided. However, the market has begun to trade on "how the future will be priced if he becomes chair." Moreover, the predictive market's 31% bet on him continues to rise, far exceeding that of his competitors.

At this juncture, it is certain that interest rate cut expectations are moving towards realization; the crypto industry is seeking policy breakthroughs; and U.S. dollar assets are in a global "increased issuance of U.S. debt - high interest rates - risk appetite recovery" triangular game. Waller, as a politically acceptable, policy-predictable, and market-imaginable "successor," naturally becomes the focus of bets.

But perhaps there is another topic worth paying attention to: If he ultimately does not become the Federal Reserve Chair, how will the market readjust these expectations? And if he truly takes office—then the ranking competition for the "next generation dollar system" may just be beginning.

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