Changes in Federal Reserve leadership, rising expectations of interest rate cuts for the US dollar, and new opportunities in the cryptocurrency market

The Trump administration recently announced major personnel changes, which have sparked strong reactions in the financial markets. Trump officially nominated Kevin Waugh to succeed Jerome Powell as Federal Reserve Chair, with Powell set to step down in May 2026. Meanwhile, the White House appointed trusted member Stephen Milan to the Federal Reserve Board. Both new leaders are staunch advocates of interest rate cuts, indicating a significant shift in the Fed’s policy direction.

Federal Reserve Personnel Changes, Facing Unprecedented Challenges to Independence

This personnel adjustment has triggered in-depth discussions about the Fed’s independence. Traditionally, the Federal Reserve operates as an independent institution, setting monetary policy without political interference. However, this direct personnel change breaks with precedent and shows clear signs of political influence. With Waugh and Milan in office, a more aggressive interest rate cut policy is expected, marking a move from the previous conservative stance toward a more easing-oriented approach.

US Dollar Rate Cut Cycle Begins, Short-term Liquidity Boost

Historically, the Fed has cut rates three times in 2025, and the current interest rate environment is already easing. Looking ahead to 2026, the market widely expects a rate cut in June. The start of the dollar rate cut cycle will increase global liquidity supply, directly boosting asset prices. For the cryptocurrency market, this rising expectation of dollar easing is a strong bullish signal—loose monetary policy often drives investors toward higher-yield assets, and crypto fits this category. In the short term, the crypto market is likely to benefit from the global liquidity release and the resulting upward cycle.

Long-term Concerns: US Dollar Credibility and Inflation Dilemma

However, the long-term effects of dollar rate cuts are not purely positive. Continued rate cuts and liquidity expansion could weaken the dollar’s international credibility and increase the risk of inflation resurgence. Historical experience shows that excessive monetary easing often leads to asset bubbles and rising prices. For the crypto space, this is a double-edged sword—short-term liquidity abundance drives prices higher, but long-term inflation and dollar depreciation could pose structural risks.

Key Points to Watch Moving Forward

The full picture of this round of Fed personnel changes and policy adjustments is still unfolding. Investors should closely monitor the timing and magnitude of rate cuts, market expectations for inflation, and the policy responses of other central banks worldwide. The long-term trend of the crypto market will gradually become clearer through the interaction of these macro factors.