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President Trump really doesn’t like Federal Reserve Chair Jerome Powell. Over the weekend, the Justice Department made clear Powell is the target of an investigation pertaining to his congressional testimony and the central bank’s plans to build a new $2.5 billion headquarters. In potentially good news for ETFs such as the Coinshares Valkyrie Bitcoin Fund (BRRR), assuming the Trump/Powell rift labors on, bitcoin traded slightly higher Monday. That could be a sign the largest cryptocurrency is a shelter-from-the-storm play as the White House intensifies efforts to remove Powell from his leadership post.
Entering this year, there was plenty of chatter regarding Powell potentially resigning, allowing Trump to replace him with a Fed chair that would accelerate the pace of interest rate cuts. Alone, that could benefit bitcoin and funds like BRRR. However, the squabble between Trump and the Fed chair could put a spotlight on non-traditional monetary assets such as bitcoin.
Why Bitcoin, BRRR Matter Now
Nigel Green of deVere Group noted that it won’t be lost on global market participants that Trump is taking direct aim at Powell, potentially making some investors jittery about the dollar. That could compel them to consider bitcoin, which is outside the purview of central banks.
“Pressure on the central bank of the world’s largest economy carries global consequences,” observed Green. “Confidence in monetary governance in the United States anchors financial stability far beyond its borders. When that confidence weakens, capital moves quickly toward assets designed to exist beyond political reach.”
He added that the signal being sent by the White House to Powell has potential to lift bitcoin. That remains to be seen, but Monday brought signs of that scenario playing out. To be sure, it is highly unusual for the Justice Department to investigate a sitting Fed leader.
If the investigation turns against Powell, the dollar could suffer due to credibility issues, perhaps lifting bitcoin and BRRR. After all, past periods of strain on central banks sparked interest in gold and other currencies. Now professional traders can add ETFs like BRRR to that list of options.
“Financial systems operate on trust in institutions. The Fed anchors that trust for the dollar, for global bond markets, for equity valuations and for cross-border investment flows,” added Green. “When legal pressure appears alongside political frustration over interest rates, investors reassess the durability of that anchor.”
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