Kevin Hassett Sparks a Crypto–Bond Market Split as Fed Race Heats Up
Kevin Hassett’s rise as the main contender to switch Jerome Powell in 2026 has triggered an uncommon divide throughout monetary markets: crypto merchants are cheering, whereas bond traders are warning of destabilizing price cuts.
The cut up is sharpening as new experiences element personal considerations raised to the US Treasury.
Bond Markets Warn of Aggressive Cuts
Bond traders have privately advised the Treasury Department that they’re involved Hassett would push for speedy, politically aligned price cuts, in response to the Financial Times.
The discussions, held in November with Wall Street banks, main asset managers, and members of the Treasury Borrowing Advisory Committee, revealed a constant worry: a Hassett-led Fed might prioritize the administration’s preferences over inflation control.
The report signifies that traders fear that Hassett might advocate indiscriminate price cuts even when inflation stays above the two% goal.
Participants within the conferences additionally pointed to earlier briefings the place Hassett had targeted on non-market political subjects, elevating questions in regards to the Fed’s independence.
Prediction markets now give Hassett round 75% likelihood of changing into the following Fed Chair, far above rivals Christopher Waller and Kevin Warsh.
Crypto Markets See a Dovish Tailwind
Crypto markets are taking the opposite view. Traders interpret Hassett’s stance as a inexperienced gentle for quicker easing, extra liquidity, and a weaker greenback, a mixture that traditionally helps Bitcoin, Ethereum, and high-beta altcoins.
Hassett has publicly mentioned he would lower charges instantly if he led the Fed. That dovish posture contrasts sharply with Powell’s cautious, data-anchored approach, which has stored actual yields elevated and threat urge for food subdued.
His background additionally fuels optimism in digital-asset circles. Hassett beforehand served as an advisor to Coinbase and holds over $1 million in COIN inventory, creating each conflict-of-interest questions and expectations of a extra crypto-friendly regulatory setting.
Bitwise strategist Juan Leon lately argued that a Hassett-led Fed could be “strongly bullish,” citing his pro-crypto regulatory work and his historical past of criticizing present charges as “too high.”
Political Pressure Intensifies the Divide
President Trump has steadily amplified his criticism of Powell and has repeatedly hinted that he has “already determined” on the following Fed Chair. He is anticipated to announce the successor quickly.
At the identical time, experiences point out that Trump might elevate Treasury Secretary Steven Mnuchin to change into his prime financial adviser if Hassett is appointed. This highlights the administration’s effort to realign financial management round a extra aggressive development agenda.
The political dynamics add to bond-market nervousness. Investors worry a situation wherein the Fed shifts towards speedy easing whereas inflation stays sticky. Such a transfer would weaken central-bank credibility simply as deficits and issuance stay at traditionally high ranges.
Hassett’s candidacy has crystallized a uncommon market divergence: crypto is pricing in liquidity-driven upside, whereas bonds are bracing for coverage threat and volatility.
With Powell’s term ending in May 2026 and remaining interviews underway, the following a number of weeks will form expectations for each financial coverage and digital-asset markets.
An official nomination is anticipated early subsequent 12 months. Until then, traders will proceed to commerce the rising chance of a dovish, crypto-aligned Fed and the pushback from conventional finance that comes with it.
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