The US Dollar Index (DXY) has dropped to a three-year low amid reports that President Donald Trump is considering removing Federal Reserve Chairman Jerome Powell.
Meanwhile, this development has positively affected Bitcoin (BTC) price, pushing it to its highest level since Trump's Liberation Day.
Trump Pressures Powell, Adds Pressure on USD
According to the latest data, DXY has fallen below 99. At the time of writing, it stands at 98.2, representing the lowest value since March 2022.
DXY Performance. Source: TradingViewEconomist Peter Schiff emphasized the severity of the situation in his latest post on X (formerly Twitter).
"Gold has risen over 50 USD, reaching a record high of 3,380 USD. The euro is over 1.15 USD. The dollar has also fallen below 141 Japanese yen and 0.81 Swiss francs (a 14-year low, only 3% above the record low). The dollar index is below 98.5, the lowest in three years. This is becoming serious," Schiff posted.
The sharp dollar decline occurred amid the latest comments by National Economic Council Director Kevin Hassett on Friday, April 18. Hassett revealed that Trump and his team are actively considering the possibility of removing Powell.
His statement was in response to a reporter's question about whether removing Powell would be an option.
"The President and his team will continue to study that issue," Hassett replied.
Additionally, he criticized the Federal Reserve for politically motivated actions under Powell's leadership. Specifically, Hassett criticized the Fed for raising interest rates immediately after Trump's election and cutting them before the election, moves he believes benefited the Democratic Party.
Notably, the increasing disdain for Powell is a reaction to the Fed's stance on interest rates. BeInCrypto had previously reported that the Fed is likely not to cut rates in May amid rising inflation and Trump's tariff pause.
Recently, Trump also blamed the Fed Chairman for being slow to act on rate cuts. In a social media post, Trump compared Powell's actions unfavorably to the European Central Bank (ECB), which is preparing for its seventh rate cut.
Trump argued that Powell, whom he describes as "always too late and wrong," should have taken similar measures long ago to address economic conditions.
"Powell's termination cannot come soon enough!" the President wrote.
The possibility of removing the Fed Chairman raises serious questions about the Federal Reserve's independence and its impact on global markets. Powell, whose chairmanship extends until May 2026, had previously stated that legal protections prevent his removal and that he intends to complete his term.
Could USD Weakness Drive Bitcoin to New Heights?
However, it's worth noting that if Powell is removed and President Trump successfully persuades the Federal Reserve to cut rates, this could lead to a price surge in the cryptocurrency market. Typically, when the Fed reduces rates, the US dollar tends to weaken.
Therefore, cryptocurrency investors, especially Bitcoin holders, who are often seen as an inflation hedge and protection against fiat currency weakness, may benefit. The inverse relationship between DXY and BTC further supports the potential for price increases if the dollar weakens.
In fact, the recent decline in the dollar index coincides with a significant increase in Bitcoin's price. The largest cryptocurrency has risen above 87,000 USD for the first time since April 2.
"USD weakness is driving the cryptocurrency rally," Sean McNulty, Head of Derivatives Trading at FalconX, told Bloomberg.
Bitcoin Price Performance. Source: TradingViewAt the time of writing, BTC is trading at 87,586 USD. Data from BeInCrypto shows this represents a 3.5% increase over the past day. As the market celebrates these gains, attention remains focused on Trump's next moves and their broader economic implications.
