Could Bitcoin Benefit if Trump Dismisses Powell? Lessons from Turkey's Currency Crisis

Could Bitcoin Benefit if Trump Dismisses Powell? Lessons from Turkey’s Currency Crisis

Turkey’s President Recep Erdogan’s history of intervening in central bank affairs serves as a warning for the U.S., suggesting that such actions can lead to financial instability and potentially spur investment in cryptocurrencies like Bitcoin.

Overview

Reports indicate that President Donald Trump may consider firing Federal Reserve Chairman Jerome Powell, which could impact the ongoing trend of Bitcoin (BTC) adoption amidst a decline in the U.S. dollar (USD).
The lira crisis in Turkey exemplifies the repercussions of such interference, resulting in massive currency depreciation and increased investment in BTC and stablecoins.

The week commenced with the U.S. dollar at a staggering low compared to three years past, while Bitcoin holds steady at about $87,000, marking a 2% increase for the day.

This enduring stability in Bitcoin might signal its evolving status as a safe haven asset. The shift from USD towards assets that resist seizure and censorship, like BTC, may accelerate if Trump acts on his intentions towards Powell. Given Erdogan’s past, it is paramount to heed the lessons from Turkey’s experience, where political interference led to a sevenfold collapse of the lira since 2019.

Trump’s Friction with the Fed

Trump has long been at odds with the Federal Reserve, often chastising Powell for lagging on interest rate adjustments. As Powell warns about potential stagflation and inflation concerns, Trump continues his push for lower borrowing costs, branding Powell as a “major loser”.

Erdogan’s missteps in Turkey highlight how undermining central bank autonomy can drastically alter market perceptions and investor confidence. From 5.3 TRY per dollar to a staggering 38 TRY per dollar in just a few years,
Turkey’s inflation was exacerbated by Erdogan’s directive against high-interest rates, posing a cautionary tale for the U.S.

Conclusions

These parallels illustrate how Trump’s maneuvers against the Fed may not lead directly to a lira-like crash but could significantly devalue the dollar, which impacts global financial systems due to its reserve currency status. If such trends persist, U.S. investors could seek refuge in Bitcoin and other cryptocurrencies, mirroring Turkish behavior in response to their currency collapse.

This analysis draws attention to the potential global implications of any moves against Federal Reserve independence.