Trump is about to replace the Federal Reserve Chair, and the crypto market and bond market are both holding their breath.

Trump announces that a new Federal Reserve Chair will be appointed in the near future. This news may seem straightforward, but it is linked to the nerves of the entire financial market. In the current context where Trump’s political game with incumbent Fed Chair Powell is gradually cooling down and the tariff war continues to escalate, the candidate for the new chair and their policy orientation will directly influence the direction of the bond market, the US dollar, and the crypto market.

Why is the Fed Chair candidate so critical?

The Fed Chair controls the direction of U.S. monetary policy, which not only affects the U.S. economy but also impacts global financial markets. According to the latest news, market participants are very cautious about the new chair candidate.

What is the bond market worried about?

Head of investment firm Picton Investments explicitly warned that if Trump appoints a Fed Chair perceived as overly compliant or too “soft” on policy, the bond market will quickly punish the United States. What does this mean? The market punishment for bonds usually manifests as:

• Rising U.S. Treasury yields
• Pressure on the US dollar
• Increased financing costs
• Pressure on risk assets (including cryptocurrencies)

In other words, the market hopes to see a Fed Chair with independence who can stick to the goal of price stability, rather than a candidate overly influenced by political factors.

Trump and Powell’s game has cooled down

According to HTX Research, Trump previously tried to pressure incumbent Fed Chair Powell through judicial means, but this quickly cooled amid opposition from the Senate and the Republican Party. This indicates that even the Trump administration faces constraints on the Fed Chair candidate issue — which is good news for the market, implying the candidate will not be overly politicized.

The complexity of the current market environment

The announcement of the new chair candidate coincides with a special market moment:

Volatility caused by escalating tariff wars

This week, Trump issued tariff threats to European countries over Greenland, leading to:

• Bitcoin briefly falling below $92,000, with $864 million in 24-hour liquidation
• Gold and silver reaching all-time highs
• European auto manufacturers’ stocks plunging

This divergence is quite interesting: gold is seen as a safe-haven asset gaining strength, while Bitcoin, as a risk asset, is under pressure. The policy orientation of the new Fed Chair will directly influence whether this market divergence continues.

Macroeconomic data is regaining influence on pricing

Recent CPI data did not exceed expectations, with core inflation holding at 2.6%. This means that the future direction of monetary policy will depend more on economic data than political factors. The new Fed Chair will need to balance easing, inflation control, and economic growth.

What might happen after the new chair is announced?

Based on current information, reasonable inferences are:

If the candidate is perceived as “hawkish”

• Bond markets may rebound, with U.S. Treasury yields rising
• The US dollar may strengthen
• Crypto markets may face short-term pressure (high-beta assets under pressure)
• But long-term, market expectations could stabilize

If the candidate is perceived as “dovish”

• Bond markets may be pressured, with yields falling
• The US dollar may weaken
• Crypto markets might gain liquidity support
• But this could trigger a “punitive” reaction from the bond market

The most likely scenario

Considering constraints within the Senate and Republican Party, the new chair candidate is likely to be a relatively “neutral” technocrat, neither overly hawkish nor dovish. Such a candidate might be accepted by the market, but it also means that expectations for rate cuts could continue to be pushed back.

Key variables for the crypto market

According to HTX analysis, the crypto market is in a transitional phase of “macro bottoming and data disturbance.” The new Fed Chair’s candidate and their first policy signals will be key factors in whether Bitcoin can break through high levels. If the new chair’s policy signals are clear enough and market expectations stabilize, the crypto market could enter a new pricing cycle.

Summary

Trump is about to announce a new Fed Chair, which is not just a personnel appointment but a declaration of the future monetary policy direction. The market’s key concern is whether this new chair has independence and can uphold the goals of price and financial stability. The bond market has already signaled — if the candidate is perceived as too “soft,” punishment will come quickly. For the crypto market, the policy orientation of the new chair will directly influence the strength of the US dollar and the attractiveness of risk assets. Against the backdrop of escalating tariffs and ongoing geopolitical risks, this announcement could become an important turning point in the market. Follow-up attention should be paid to the identity of the new chair, their first public speech, and policy statements, as these will determine the next market direction.