The conflict between U.S. President Donald Trump and Fed Chairman Jerome Powell is escalating amid persistently high interest rates. Trump advocates for lowering rates to boost economic growth.
Trump vs. Fed Conflict
President Trump continues to sharply criticize Powell, stating, 'I don’t think he’s an intelligent person… He’s just stupid.' Trump advocates for lower interest rates to bolster economic recovery and manage public debt. However, Powell remains steadfast in his commitment to keeping rates high to combat inflation. The Fed’s latest decision, announced last night, held the interest rate steady at 4.5%, marking the fifth consecutive unchanged decision since December 2024.
Altcoin Market Under Pressure
Analysis indicates that the high interest rate environment poses a substantial challenge for cryptocurrencies, particularly altcoins. Historically, altcoin bull markets have flourished during periods of low interest rates, such as in 2017 and 2021. Current rates, however, are even higher than those periods. Furthermore, the Fed’s ongoing balance sheet reduction, known as quantitative tightening, actively shrinks market liquidity, making it difficult for altcoins to gain traction. According to Powell’s projections, the Fed’s transition to balance sheet expansion, which could aid altcoins, might not occur until 2028 at the earliest, contingent on interest rates dropping to zero.
Global Factors Impacting the Market
Koch also highlights a concerning trend: the withdrawal of small, individual investors from the market. While institutional investors like MicroStrategy and Bitcoin ETFs continue to accumulate Bitcoin, the declining interest from retail participants creates a significant hurdle for smaller altcoin projects, whose prices largely depend on individual investor engagement. Compounding these issues, global uncertainties such as Middle East conflicts, rising oil prices, and U.S. domestic political tensions further erode market confidence, dampening demand for altcoins.
In light of the current confrontation between government officials and the high interest rates, the future of altcoins remains in question, especially considering global economic and political challenges.
