Markets Rattle as Trump Turns Up Heat on Fed, While Crypto Shows Strength

U.S. financial markets faced strong headwinds this week after former President Donald Trump escalated his criticism of Federal Reserve Chair Jerome Powell, reigniting tensions between the central bank and the political sphere. On April 21, Trump took to social media and public appearances to demand swift interest rate cuts, blaming Powell for stalling economic momentum and contributing to market instability. This rhetoric triggered a sharp selloff in equities and further depreciation of the U.S. dollar.

Major indices reflected the market’s unease. The S&P 500 plummeted by 2.4%, the Nasdaq Composite slipped by 2.5%, and the Dow Jones Industrial Average lost nearly 1,000 points—marking a 2.5% decline on the day. These declines extend an ongoing downturn, with the S&P and Nasdaq now down 12% and 18%, respectively, since the beginning of the year. At the same time, the U.S. Dollar Index (DXY) fell below 98, reaching its lowest level in three years, signaling weakened investor confidence in the dollar as political pressure mounts on monetary authorities.

Amid the turbulence in traditional markets, crypto assets provided a surprising safe haven. Bitcoin surged to $88,500, its highest level in over a month, as investors turned to digital assets as an alternative hedge against inflation and institutional uncertainty. The total cryptocurrency market cap remained firm at approximately $2.83 trillion. This divergence underscores a growing trend of market participants reallocating capital from fiat-denominated instruments into decentralized finance assets, particularly during moments of macroeconomic instability.

Trump’s demands are placing the Fed in a precarious position. While Powell has maintained that monetary decisions will be driven by data rather than political pressure, calls for aggressive cuts in interest rates are growing louder—not just from Trump, but from several market observers who argue that higher rates could stifle a fragile economic recovery. However, the Fed is expected to hold rates steady at its upcoming May 7 meeting unless significant deterioration in economic indicators justifies a pivot.

As the standoff between fiscal and monetary authorities intensifies, investors are likely to remain cautious. The Fed must balance its long-term inflation-targeting framework with short-term political and market volatility. In the meantime, crypto’s resilience amid equity and currency turmoil may signal a deeper shift in investor sentiment—one where decentralized financial systems gain increased relevance in a time of growing uncertainty.