Bitcoin Market Has Yet to Price in Potentially Dovish Fed Under Trump, Analyst Says

Bitcoin investors could be overlooking the impact of a more dovish Federal Reserve—an outcome that hinges on who President Donald Trump appoints to succeed Jerome Powell as Fed Chair, according to economist Alex Krüger.

Currently trading at $113,628, Bitcoin has experienced a notable pullback after hitting an all-time high of $124,128 last week.

Many traders expect the Fed's anticipated first rate cut in September to set a more bullish stage for the crypto market, and a Fed chair with a dovish stance could deliver even greater upside for Bitcoin.

September Rate Cut in Focus as Trump Considers Powell's Replacement

In his X post, Kruger portrayed optimism on how Trump's choice could create a revival in the Bitcoin market

“I have a high degree of confidence this cycle is not over because I am expecting changes in the Fed to bring on considerably more dovish monetary policy."

He emphasized that the outlook for risk assets like Bitcoin would become more optimistic once Trump announces his nominee, with the decision expected to be a key market catalyst.

Powell’s tenure as Federal Reserve Chair will be come to an end in May 2026, but Trump has already started floating new candidates for the position.

According to CNBC, the administration is currently vetting 11 individuals to potentially replace Powell. Recent contenders include Jefferies’ chief market strategist David Zervos, BlackRock’s global fixed income CIO Rick Rieder, and former Fed Governor Larry Lindsey.

Other reports suggest Trump may have already narrowed the field to just three or four finalists, with an appointment announcement potentially coming sooner than expected.

Market Sentiment Poised for a Shift

The Federal Reserve’s monetary policy directly influences interest rates and risk appetite across markets—key factors impacting Bitcoin’s price trajectory.

With expectations of a rate cut at the September 17 policy meeting running high—83.9% of market participants anticipate a reduction—a dovish turn at the Fed could help trigger greater retail engagement and a renewed Bitcoin rally.

Trump’s often tense relationship with Powell has been well documented, with the president repeatedly criticizing Powell's resistance to faster rate cuts and recently declaring that Powell’s termination cannot come fast enough!

Meanwhile, Florida Senator Rick Scott echoed the call for new leadership at the central bank, saying

"Its time for new leadership at the Federal Reserve."

David Duong, global head of research at Coinbase Institutional, noted on Friday that significant retail capital remains parked on the sidelines in money market funds.

A more accommodative Fed policy, he said, could help “unlock greater retail participation in the medium term,” adding further fuel to the potential for a renewed crypto bull market.