Bitcoin Breaks Above $87K as Dollar Plunges Amid Powell Dismissal Rumors
A perceived threat to the Federal Reserve’s independence triggered a wave of risk-on sentiment in markets Monday, sending the U.S. dollar tumbling and propelling Bitcoin (BTC) and gold sharply higher.
Bitcoin outperformed the broader crypto market early in the day, climbing over 2% to $87,200 — its highest level since April 2 — as the U.S. Dollar Index (DXY) slumped to a three-year low. The rally marked a bullish breakout from a recent trading range between $83,000 and $87,000. Meanwhile, major altcoins including XRP, Ethereum (ETH), and Cardano (ADA) posted more modest gains of around 1%.
The pressure on the greenback came amid reports that President Donald Trump is actively seeking to remove Federal Reserve Chairman Jerome Powell, a move that many see as a direct challenge to the Fed’s independence. Hedge funds responded by selling the dollar against major global currencies like the euro, Japanese yen, and Australian dollar, pushing the DXY down to 98.5 — a level not seen since April 2022. The index is now down 10% over the past three months.
Dollar weakness typically loosens financial conditions, encouraging risk-taking across asset classes. Gold continued its record-setting run, with spot prices hitting $3,382 per ounce, up 28% year-to-date. U.S. equity futures were less enthusiastic, with contracts tied to the S&P 500 and Nasdaq slipping 0.5%.
Market analysts attribute the dollar’s slide to comments from National Economic Council Director Kevin Hassett, who confirmed Friday that Trump is considering replacing Powell. That revelation appears to have fueled safe-haven demand for both Bitcoin and gold.
“Bitcoin’s breakout to $87,000 seems closely tied to the sharp decline in the dollar and a 2% rally in gold, both sparked by Trump’s push to oust Fed Chair Powell,” said Markus Thielen, founder of 10x Research. “While a U.S.-Japan trade deal may be on the horizon, today’s primary driver is concern over the Fed’s autonomy.”
Adding to the uncertainty, Trump reiterated his criticism of Powell on Truth Social last week, writing, “Powell’s termination cannot come fast enough,” and again calling for lower interest rates. For his part, Powell said the Fed would wait for more economic data before adjusting rates, cautioning about rising risks of stagflation.
Chicago Fed President Austan Goolsbee warned that any attempt by Trump to fire Powell would damage the institution’s credibility and threaten market confidence.
