Trump vs Fed Sparks Surprise Rally in Crypto Market, Wiping Out $180M in Shorts

The crypto market has survived and even prospered after the latest bearish development caused by the US president. Donald Trump has caused chaos in the markets by calling for the removal of Jerome Powell, the current chair of the Fed. Based on his statements, this is because the chair would not cut the interest rates. However, as the stock market fell, the crypto sector started to surge, with the Bitcoin price seeing moderate gains. This came as a surprise, as previously, the Trump crypto effect had been recorded to be bearish. Based on the previous instance, every time Trump causes havoc in the financial world, crypto crashes, too. 

Is Trump’s War on the Fed Fueling a Bitcoin Boom?

As the POTUS has started to threaten the FED to lower the interest rates, the dollar index is at a three-year low. Additionally, both the stock market and the US dollar have already been weakened by the ongoing chaos caused by the Trump tariffs. However, the crypto market has recovered part of its losses caused by the tariff announcements. In the past 24 hours, Bitcoin price even broke the multi-month resistance of $87K. Additionally, the crypto gains did not stop there, as Bitcoin is now trading around the $88,400 mark. However, the conflict between the Federal Reserve chair and Donald Trump is ongoing.

Is Trump Forcing the Fed’s Hand on Interest Rate Cuts?

Donald Trump is unyielding in his opinions and policies, as he has also now increased the pressure on the Fed to cut interest rates. He bombarded the Fed chair in a recent social media post. “‘Preemptive Cuts’ in Interest Rates are being called for by many. With Energy Costs way down, food prices substantially lower, and most other things’ trending down, there is virtually No Inflation. ” As such, he stressed the need for interest rate cuts from the current 4.5%. Trump has not refrained from showing his frustration about Powell’s decision-making and has even called him names. 

Jerome Powell has also criticized the Trump tariffs and warned that they might cause a price rise. Additionally, he also mentioned that this trade policy would slow down the United States’ economic growth, shrinking the economy. The US president’s answer to such critics was that the Fed chair should be fired as fast as possible. Despite all the chaos and uproar caused by this conflict, the interest rates are expected to remain as they have been. The Fed will likely continue with its wait-and-see approach, as the market participants have predicted a 13% chance for rate cuts. 

Did Trump Trigger a $180M Crypto Short Squeeze?

The unexpected Trump crypto market effect seems to have surprised investors as well, as a significant number of shorts have been liquidated. In the past 24 hours, nearly $97 million in BTC shorts have been liquidated. Additionally, in total, investors have lost over $180 million in shorts when combined with all the losses from various cryptocurrencies. Today’s 1.07% price gain has caused part of the large amount of short position losses in BTC. The prime crypto also recorded a 3.02% weekly surge, which was likely unexpected by market participants. 

Crypto at Risk from Trump’s Unpredictable Moves?

One of the biggest recent crypto surges was caused by Donald Trump’s crypto-friendly policies. However, his erratic movements and actions remain a burden on the crypto market. As such, with the end of his conflict with the Fed not in sight, investors need to follow the related news closely. Additionally, the ongoing negotiations with China can also be crucial for the future of risk markets like crypto.