The bullish sentiment in the cryptocurrency market appears to be returning, with the uncertain fate of US Federal Reserve Chairman Jerome Powell. As US President Donald Trump hinted at the possible removal of Powell from his role, Bitcoin gained positive momentum and reached above $87,500 apiece.

In the last 24 hours, Bitcoin jumped by over 3%, breaking the week-long stagnation, according to the Coingecko data. Other top cryptocurrencies, including Ethereum and XRP, followed Bitcoin’s trajectory to jump higher, but the leap remained in single digits.

Movement of Bitcoin in the last 7 days
Movement of Bitcoin in the last 7 days

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The US Dollar Is Falling

The bullish sentiment in crypto came as the US dollar weakened due to the intensifying tussle between Trump and Powell, which highlights a significant clash over monetary policy and the independence of the central bank. The conflict had tangible effects on financial markets. The US dollar has weakened against other major currencies amid concerns over the Fed's independence, and investors are wary of potential political interference in monetary policy.

The US dollar has experienced a substantial decline, reaching multi-year lows against major currencies. Today (Monday), the dollar index (DXY) crashed to 98.29, which is its lowest level in over three years. This decline reflects a broader trend, with the dollar losing approximately 7.6% year-to-date.

Read more on USD trading analysis on Forexlive.com.

The Clash Between Trump and Powell

President Trump has publicly expressed his dissatisfaction with Powell's handling of interest rates. He has accused Powell of being "too late and wrong" in his decisions and has suggested that Powell's "termination cannot come fast enough". Trump's frustration stems from the Federal Reserve's reluctance to aggressively cut interest rates, which he believes is necessary to stimulate economic growth. He has also compared the Fed's actions unfavorably to those of the European Central Bank, which has recently lowered its key interest rate.​

In response to the criticism, Powell has emphasised the importance of the Federal Reserve's independence. He has stated that the Fed's decisions are based solely on economic data and are not influenced by political pressure. Powell has also indicated that he would not resign if asked by the President, asserting that the Fed Chair can only be removed "for cause," a standard that does not include policy disagreements.

The dispute raises questions about the legal authority of the President to remove the Fed Chair. While the Federal Reserve Act allows for the removal of the Chair "for cause," this has traditionally been interpreted to mean misconduct or incapacity, not policy differences.

Source: Finance Magnates