Bitcoin and Ethereum Gain Traction as Trump’s Fed Chair Shortlist Signals Crypto Shift

The prospect of a crypto-friendly Federal Reserve under Donald Trump is rippling through digital asset markets, with Bitcoin and Ethereum seeing renewed inflows as speculation grows over who will succeed Jerome Powell.

A Fed at a Crossroads

With Powell’s term set to expire in May, the Trump administration has narrowed its Federal Reserve chair shortlist to 11 names. Among them are figures seen as open to digital assets, including BlackRock’s Rick Rieder, Federal Reserve Governor Michelle Bowman, and current Governor Christopher Waller.

All three have previously voiced positions that could tilt policy in a direction more favorable to crypto adoption. Rieder, for instance, has suggested Bitcoin may become “a permanent fixture” in portfolio allocation, while Bowman has argued Fed staff should be permitted limited crypto holdings to better understand the market.

For investors, the signal is clear: Fed leadership could soon bring digital assets closer to the monetary mainstream.

Market Response: Bitcoin Cools, Ethereum Outperforms

Bitcoin remains the bellwether of market sentiment. After reaching a 2025 peak of roughly $124,000, BTC has slipped back near $115,000, a 6% pullback that analysts attribute to profit-taking ahead of further clarity on Fed policy. Still, the asset is up significantly year-to-date, buoyed by expectations of rate cuts and a friendlier regulatory environment.

Ethereum has been the standout. The token has gained 87% over the past 60 days, supported by institutional accumulation and expanding adoption in tokenization projects, even as trading volumes have dipped 15%. The divergence highlights ETH’s evolving role as a long-term infrastructure bet, beyond the immediate volatility tied to Fed speculation.

Institutional and Strategic Implications

Wall Street is watching closely. Rieder’s standing at BlackRock gives his candidacy particular weight: the firm has championed Bitcoin ETFs and is a bellwether for institutional sentiment.

Meanwhile, Jefferies chief strategist David Zervos—another name linked to Trump’s shortlist—brings credibility from a bank with ties to Circle, eToro, and other crypto ventures. His inclusion underscores the growing intersection between traditional finance and digital assets.

Investors see these signals not just as leadership choices, but as indicators of where monetary and regulatory policy may be heading.

Psychology of Capital Flows

Markets are also moving on psychology. The possibility of a pro-crypto Fed leadership has sparked FOMO-driven inflows, with investors fearing they may miss early positioning in what could be a more accommodative era for digital assets. Yet with the final nominee still uncertain, volatility remains elevated. Traders are navigating a narrow path between optimism and the risk of over-exuberance.

Looking Ahead

If Trump selects a Fed chair with a constructive stance on crypto, capital flows into Bitcoin and Ethereum could accelerate, reinforcing their place in institutional portfolios. But the appointment process, and the degree to which supportive rhetoric translates into policy, will be decisive.

For now, investors are treating the shortlist as a potential inflection point: the moment when digital assets move from the regulatory periphery toward the core of U.S. monetary debate.