Bitcoin (BTC) outshined the otherwise volatile alternative cryptocurrencies early Monday as the dollar index crashed to a three-year low on reports that President Donald Trump is exploring ways to remove the Federal Reserve Chairman Jerome Powell.
BTC rose over 2% to $87,200, hitting the highest since April 2, according to data source CryptoX. The move marked a bullish resolution to the recent consolidation between $83,000 and $87,000. Major alternative cryptocurrencies such as payments-focused XRP, Ethereumโs ether and Cardanoโs ADA rose over 1% each, lagging BTC.
In FX markets, hedge funds sold the U.S. dollar against major currencies, including euro, yen and the Aussie dollar, driving the dollar index to 98.5, the lowest since April 2022, according to data from charting platform TradingView. The DXY has declined by 10% in three months. Weakness in the dollar typically eases financial conditions, greasing risk-taking in financial markets.
Meanwhile, goldโs rally continued, with the per ounce price reaching a record high of $3,382, taking the year-to-date gain to 28%. Futures tied to the S&P 500 and Nasdaq traded 0.5% lower.
Observers suggest that National Economic Council Director Kevin Hassettโs comment on Friday regarding Trumpโs intention to remove Powell likely triggered the selling of the dollar, along with upticks in BTC and gold.
โThe move in bitcoin to $87,000 appears to be driven by a sharp drop in the U.S. dollar and a +2% rally in gold, both triggered by Trumpโs push to replace Fed chair Powell. While a trade deal with Japan may be announced soon, the key catalyst today is the perceived thread to Fed independence,โ Markus Thielen, founder of 10x Research, told CryptoX.
Trumpย postedย on Truth Social on Thursday that โPowellโs termination cannot come fast enough,โ while reiterating calls for lower interest rates on the following day. Early last week, Powell said that the Fed would wait for more data on the economy before changing the borrowing cost while warning of stagflation.
Chicago Fed President Austan Goolsbee warned that a move by Trump to terminate Jerome Powell would undermine the credibility of the Fed.
