President Donald Trump’s chief economic adviser has called for former Federal Reserve Chair Jerome Powell to leave the central bank’s board, reopening the debate over the Fed’s policy direction weeks after officials raised interest rates for the first time in three years. For bitcoin investors, the personnel drama in Washington is less interesting than the question underneath it: does a Powell exit change where interest rates go next?
What Hassett actually said
National Economic Council Director Kevin Hassett said on Fox News’ Sunday Morning Futures that it was time for Powell to move on, after an internal watchdog report found management problems tied to the renovation of the Federal Reserve’s Washington headquarters. I think that it is time for him to move on and to respect the independence of the Fed, Hassett said when asked whether Powell should resign.
President Trump separately called for Powell to be forced to resign from the board following the report, continuing pressure that ran through Powell’s entire tenure as chair. The Justice Department said Friday it would not reopen a criminal investigation based on the Fed inspector general’s findings. The watchdog found no evidence of criminal wrongdoing or administrative misconduct connected to the 2.4 billion USD headquarters renovation, though it identified management deficiencies that contributed to the project running well above its original cost. Attorney General Todd Blanche said an independent audit could still lead to an investigation if it uncovers evidence of criminal conduct, and the Fed has said an outside auditor will review the renovation costs.
Why Powell’s seat matters for policy
Powell’s position is unusual. He stayed on the Board of Governors after his term as chair ended in May, when Kevin Warsh replaced him, breaking with the usual practice of former Fed chairs leaving the central bank entirely. That means Powell remains one of the 12 voting members of the Federal Open Market Committee, alongside Warsh and the other governors and regional Fed presidents.
If Powell resigns before his governor term expires, Trump could nominate a successor to serve the remainder, subject to Senate confirmation. That is one more voice on the committee that sets the federal funds rate, and in a committee that raised rates 25 basis points to a 3.75 to 4 percent range on September 16 in a unanimous vote, one voice can matter at the margin. Hassett told Fox News he disagreed with that decision but respected Warsh for making it for what he considered the right reasons.
Powell, for his part, has said threats of criminal investigations into him and the Federal Reserve left him with little choice but to remain on the board.
Bitcoin’s recovery despite the hike
Bitcoin initially struggled around the September meeting before recovering. BTC eventually climbed past 87,000 USD after the hike as spot bitcoin ETF demand returned and corporate purchases provided another source of buying.
The numbers tell the story of the swing. United States spot bitcoin ETFs lost 746.3 million USD across September 15 and 16, the days around the rate decision, before recording roughly 2.65 billion USD of net inflows during the five sessions through September 23. Strategy bought another 950 BTC for 75.7 million USD between September 14 and September 20. The cryptocurrency traded near 86,000 USD over the weekend after closing September 30 around 83,600 USD.
The recovery did not remove the rate risk. HashKey Group senior researcher Tim Sun identified a second Fed hike as a bigger threat to BTC than delays to the CLARITY Act, pointing to Treasury yields, ETF flows and derivatives leverage as the factors he was watching.
Rate expectations have already moved without Powell leaving
Here is the part bitcoin bulls should note carefully: the rate outlook has improved since September without any change to the Fed’s membership. Federal Reserve Vice Chair Philip Jefferson said last week that policymakers may need more time before deciding on another rate move, while New York Fed President John Williams indicated another hike could still be needed but was not urgent.
Markets subsequently cut expectations for an October increase. The probability of another hike this month had fallen to around 18 percent by October 5, while traders continued to price a much higher chance of an increase in December.
Bitcoin responded to the softer October outlook. BTC briefly crossed 87,000 USD on October 2 after September nonfarm payrolls rose by only 29,000, well below forecasts, strengthening expectations that policymakers could pause at their October 27 to 28 meeting. Earlier in the year the pattern repeated in both directions: bitcoin climbed above 65,000 USD in July after weaker producer inflation reduced rate-hike expectations, while Warsh’s more hawkish signals have previously put pressure on the cryptocurrency.
The Treasury yield problem will outlast the personnel fight
A more dovish Fed could help bitcoin if it pulls Treasury yields lower and reduces the return available on interest-bearing assets. But the bond market has not fully followed the decline in October rate-hike expectations. United States Treasury yields remained high entering the new week, and the dollar strengthened despite the weak employment report.
Long-term yields have been particularly stubborn. The 10-year Treasury yield recently moved above 5.3 percent, keeping financial conditions tight even as investors became less convinced the Fed would raise rates again this month. High yields remain one of the main macro pressures facing bitcoin: investors can earn larger returns from government debt without taking the volatility associated with crypto.
Bitcoin has still shown that demand can offset part of that pressure. The recovery after September’s hike came as ETF inflows returned, evidence that the relationship between Fed tightening and BTC has not been one-directional. Institutional demand has softened, though not eliminated, the traditional pressure that higher rates place on risk assets.
What a Powell exit would and would not do
The honest answer is that Powell’s departure alone would not guarantee lower interest rates or an immediate liquidity boost for bitcoin. Trump would first have to nominate a replacement, and that person would need Senate confirmation before taking the seat. The eventual effect would depend on the new governor’s monetary policy stance and how their addition changes voting within the FOMC.
Trump has repeatedly favored lower borrowing costs, while Warsh and the rest of the FOMC backed September’s increase as inflation remained above the central bank’s 2 percent target. A nominee perceived as reliably dovish could shift rate expectations and provide a tailwind for risk assets. A nominee perceived as hostage to the White House could do the opposite, by raising questions about Fed credibility that push long-term yields higher.
The next immediate test is the Fed’s October meeting. Weak September payroll growth has reduced the case for another move this month, but inflation remains above target and markets still expect another rate increase could arrive before the end of the year. For bitcoin, the path of rates matters far more than the identity of the person voting on it.
Source: crypto.news and Bloomberg, Oct 5, 2026. This article is for informational purposes only and does not constitute investment advice. Digital assets are volatile and carry the risk of loss.
powell leaving over a 2.4 billion HQ renovation report when the DOJ found no criminal wrongdoing. sure, thats definitely about the renovation
@FOMOminsky right, they raided his whole tenure and this is the hook they finally landed on. respect the independence of the fed says the guy publicly campaigning to remove the chair lol
10yr above 5.3% while october hike odds sit at 18%. the bond market is doing the actual voting here, powell seat or no powell seat
the bond market voting is the right frame. powell seated or not, a 10yr above 5.3 says the next chair inherits the exact same inflation problem
@yieldcurve exactly. btc recovered past 87k WITH a hike already priced and etfs absorbing it. one governor swap changes nothing compared to a december move
first rate hike in three years and weeks later they push the chair off the board over a renovation report the IG already cleared. the timing is not subtle lol
2.4 billion for a renovation and the IG still found no misconduct. That is somehow the most Fed outcome possible.
the real question is the replacement. a board full of yes men right after the first rate hike in three years is the scenario btc either loves or hates violently, no in between
exactly, watch who gets floated as the replacement. a yes man cutting rates into sticky inflation would be the actual btc catalyst, the drama itself is noise
the replacement pick is everything. powell out with a dove means december cut talk restarts and btc rips, a hawk means the 87k hold gets tested for real
any replacement name gets market tested instantly. watch the 2yr yield on announcement day, it tells you more than the presser ever will
2.4 billion renovation, IG found no misconduct, and they push the chair anyway while the 10yr sits above 5.3. the priorities are something else
the 10yr above 5.3 while congress-adjacent folks spend weeks on a renovation nobody was criminally liable for. rate math doesnt care who sits in that seat
5.3 on the 10yr and the conversation is drywall. rates are doing more damage to risk assets than any chair shuffle will