Senator Elizabeth Warren has issued a stark warning to President Donald Trump regarding his potential move to dismiss Federal Reserve Chair Jerome Powell, suggesting that such an action could lead to a significant crash in the stock market. Furthermore, Warren cautioned that the crypto market could also suffer a downturn, given the strong correlation between Bitcoin and traditional stocks.
The Impact of Firing Powell
In an interview with CNBC, Warren, a prominent member of the Senate Banking Committee, explained that the independence of the Federal Reserve is essential to maintaining stability in financial markets. She argued that firing Powell would undermine this independence, signaling to investors that the Fed’s economic policies could be influenced by political pressures. This, she warned, could provoke a market collapse.
Warren’s warning extends beyond traditional markets, as she also raised concerns about the potential fallout for the cryptocurrency market. According to data from IntoTheBlock, Bitcoin’s price has shown a notable correlation of 0.63 with the S&P 500, indicating that Bitcoin and other cryptocurrencies often move in tandem with stock market trends. Therefore, a crash in the stock market could trigger a similar decline in the crypto market, particularly affecting Bitcoin and other leading digital assets.
Crypto Market Response
The possibility of a market crash due to the firing of Powell is significant, especially considering the rising influence of the cryptocurrency market. However, some traders remain skeptical about the immediate risk, with many betting that Trump will not proceed with dismissing Powell this year. Despite these uncertainties, the relationship between Bitcoin and the stock market suggests that the crypto market could face volatility in tandem with traditional markets.
Bullish Sentiment for Crypto Despite Risks
Amid concerns over the potential firing of Powell, there are still reasons to maintain a positive outlook on Bitcoin and the broader cryptocurrency market. Recently, President Trump hinted at a possible end to the ongoing US-China trade war, which could have a positive impact on financial markets, including cryptocurrencies. Additionally, the US administration has continued to advocate for a ceasefire in the Russia-Ukraine conflict, a move that could further stabilize global markets if successful.
From a technical perspective, crypto analysts have also expressed optimism, with some suggesting that Bitcoin and altcoins may have reached their price bottoms. According to Titan of Crypto, Bitcoin is holding steady at a crucial support level, leading some experts to predict that it could soon see a price rebound, potentially reaching the $100,000 mark. If this happens, it could fuel a broader recovery across the cryptocurrency market.
In summary, while the potential dismissal of Jerome Powell remains a concern for market stability, there are still optimistic signals for both traditional and crypto markets, depending on political developments and technical market trends.
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