Dollar drops, stocks slide, but Bitcoin rallies as Trump targets Fed and Powell

• Trump criticizes Powell, warns of economic slowdown unless interest rates are cut.
• Experts predict multiple Fed rate cuts this year, despite Powell’s resistance.

On the 21st of April, President Donald Trump ramped up his criticism of Federal Reserve Chairman Jerome Powell, calling him a “major loser” while warning of potential economic downturns.

Trump takes a jab at Powell

In a post on Truth Social, Trump emphasized that unless Powell takes immediate action to lower interest rates, the U.S. economy could face a slowdown.

He argued that, with prices on the decline, inflation seems unlikely, but a recession could be imminent if the Federal Reserve does not adjust its policies.

Trump said, 

“With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.”

Impact on U.S. stocks and crypto

Following Trump’s remarks, the stock markets across the United States closed in the red, with the S&P 500 falling by 2.4%, the Nasdaq slipping 2.5%, and the Dow Jones losing almost 1,000 points, a decline of 2.5%.

This marks a significant downturn, with the S&P 500 now down over 12% year-to-date and the Nasdaq shedding nearly 18% amid a retreat from tech stocks.

Despite this, the cryptocurrency market remained resilient, holding steady at a total market capitalization of $2.83 trillion.

Bitcoin [BTC] played a key role in supporting the market, reaching a four-week high of $88,500 on the 22nd of April.

While the global crypto market cap saw a slight dip to $2.75 trillion, Bitcoin continued to show strength, trading at $88,175 after a 0.75% increase in the past 24 hours, according to CoinMarketCap.

That being said, the Crypto Fear and Greed Index had previously reached 31, reflecting strong fear in the market, a sentiment that has persisted since February.

However, as of the latest update, the index stands at 47, indicating a shift to a neutral market sentiment.

Can Trump fire Powell?

Trump’s recent attacks on Jerome Powell, whom he appointed during his first term, have sparked speculation about the President’s potential legal ability to remove the Federal Reserve Chair before his term concludes in May 2026.

Powell has firmly stated that the president cannot dismiss him under current law.

Should Trump attempt such a move, it could result in a sharp sell-off in U.S. equity markets, according to Krishna Guha, Vice Chairman of Evercore ISI, who said on “Squawk Box”,

“If you start to raise questions about Federal Reserve independence, you are raising the bar for the Federal Reserve to cut.

He added,

If you actually did try to remove the Federal Reserve chairman, I think you would see a severe reaction in markets with yields higher, dollars lower and equities selling off.” 

Now, while Powell has resisted calls from Trump to cut interest rates, many experts believe the Fed will still implement several rate cuts this year.

Citigroup, for example, forecasts a rate reduction in June and expects a total of 125 basis points in cuts by the end of 2025.