Bitcoin (BTC-USD) rallied sharply on Monday, climbing nearly 4% to over $88,400, as the U.S. dollar weakenedfollowing renewed tensions between President Donald Trump and Federal Reserve Chair Jerome Powell. The move marks Bitcoin’s highest level since the president’s April 2 tariff announcements, which triggered a broad market correction.
The latest rally appears to be driven by a combination of macro and political forces, including:
- Weakness in the U.S. dollar, which hit its lowest level since January 2024
- Growing concerns over Fed independence
- Rising investor demand for non-correlated assets such as Bitcoin and gold
“USD weakness is driving the rally in crypto,” said Sean McNulty, derivatives trading lead for Asia-Pacific at FalconX. He noted that low liquidity conditions due to international holidays may also be exaggerating the move.
🏛️ Political Drama Weighs on Dollar
The surge in Bitcoin coincided with a steep decline in U.S. equity markets and the dollar, following Trump’s renewed criticism of Jerome Powell. Over the weekend and into Monday, the president escalated his rhetoric, suggesting he may explore options to remove Powell from his post as Fed Chair.
Comments from National Economic Council Director Kevin Hassett on Friday added fuel to the speculation, as he confirmed that Trump is actively reviewing the legal avenues to dismiss the central bank chief—raising serious questions about the Fed’s independence in shaping monetary policy.
“The mere suggestion of Powell’s removal injects uncertainty into the Fed’s credibility,” said one FX strategist at a European bank. “That has implications for both inflation expectations and dollar flows.”
📈 Safe-Haven Demand on the Rise
Bitcoin’s move mirrors similar gains in gold, which also hit a new record high Monday as investors sought hedgesagainst monetary instability and potential long-term inflation. This dual movement suggests markets are pivoting toward hard assets amid concerns over central bank politicization and future rate cuts.
“Bitcoin is increasingly trading like digital gold,” said a senior analyst at Bitwise Asset Management, who added that the current macro setup “is primed for a significant crypto rally.”
Still, analysts caution that low liquidity—especially during global holidays—can amplify price swings and shouldn’t be viewed as definitive trend indicators in the short term.
📊 Broader Market Context
Bitcoin has now erased most of the losses sustained after Trump’s initial April 2 reciprocal tariff declaration, which rattled risk markets globally. The crypto’s recovery contrasts with ongoing weakness in:
- U.S. equities, with the S&P 500 and Nasdaq both nearing or entering bear territory
- The dollar, which faces growing skepticism from international investors
Meanwhile, Ethereum, Solana, and XRP also posted modest gains Monday, suggesting broader momentum in digital assets—albeit still far from January highs.
🔍 Key Takeaways for Investors
- Bitcoin is being treated as a political hedge, in addition to its role as a speculative asset and inflation shield.
- Political instability surrounding U.S. monetary policy could become a key driver of crypto flows in the months ahead.
- The current rally highlights a growing divergence between digital assets and traditional risk markets, though volatility remains high.
