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Is Decline Imminent? Fed Resists Trump's Pressure
The financial market is in turmoil, investors are worried, and cryptocurrencies are going through another period of instability. At the center of this turmoil, a name that constantly appears: Donald Trump. According to some market analysts and observers, the US president will pursue a strategy to deliberately weaken the financial market to force the Federal Reserve (Fed) to lower interest rates. A hypothesis, although ambitious, but based on public statements and worrying economic signals. Trump and Fed: The battle for influence over interest rates Last February, Donald Trump publicly stated that the Federal Reserve should lower interest rates, a demand that met with resistance from Jerome Powell, the chairman of the US monetary authority. Faced with this rejection, according to analyst Anthony Pompliano, the Trump administration will have to take action to stimulate a sharp decline in financial assets to put pressure on the Fed. "The government is wielding power by driving asset prices downward to force Jerome Powell to lower interest rates, " he asserted. There are many reasons behind this move: Forcing interest rate cuts to ease the burden of US debt; Influencing monetary policy by circumventing the independence of the Federal Reserve; Creating an economic shock to portray oneself as a savior; Adjusting market expectations by encouraging investors to predict more favorable policies in Trump's second term. The market did not take long to react. This was followed by the collapse of stock indices, accompanied by a significant decrease in bond yields, with the 10-year treasury bond yield dropping nearly 60 basis points in a few weeks. Alex Krüger, a renowned analyst, has validated this point in a message posted on X (previously Twitter) on March 11, 2025. Meanwhile, the Fed still maintains its stance as it is not expected to cut interest rates immediately, although the market predicts that rates could be cut as early as May. Cryptocurrencies face pressure and the risk of decline While stocks and bonds are declining, cryptocurrencies are also not immune to the general volatility. On March 10, the cryptocurrency market plummeted along with the panic in the stock market, due to increasing concerns about economic recession in the United States. JPMorgan has raised the likelihood of a recession in 2025 to 40%, up from the previous 30%. For Goldman Sachs, this threat is amplified by Trump's aggressive trade policies, which could worsen economic tensions. Meanwhile, some organizations are trying to take advantage of this unstable period to strengthen their presence in the cryptocurrency ecosystem. BlackRock, through its subsidiary Securitize, is expanding its presence in decentralized finance by integrating its cryptocurrency funds into DeFi platforms like Morpho and Compound. As for me, the Cboe BZX exchange is pushing for the introduction of staking services on Fidelity's Ethereum ETFs, an effort to leverage a more favorable regulatory environment under the Trump administration. If Trump can successfully implement interest rate cuts, the impact could be doubled. In the short term, investors may benefit from cheaper access to credit, but early monetary easing could risk reigniting inflation pressures. Furthermore, by creating artificial volatility in the market, the president is playing a dangerous game that could further destabilize the global economy. In the short term, the cryptocurrency market remains stagnant due to the Fed's decisions and political actions in Washington. One thing is certain: the upcoming period may determine the future of financial regulations and the development of cryptocurrencies in the global economy.