The U.S. financial markets have experienced significant volatility, leading some analysts to speculate that the Trump administration may be intentionally stirring uncertainty to pressure Federal Reserve Chair Jerome Powell into lowering interest rates.
Bitcoin advocate and market commentator Anthony Pompliano suggested in a March 10 post on X that President Donald Trump and Treasury Secretary Scott Bessent could be strategically driving down asset prices to force the Fed’s hand. The ultimate goal, he claims, would be to avoid refinancing approximately $7 trillion in upcoming debt obligations.
The Fed’s Stance Amid Growing Pressure
Despite mounting calls from Trump to lower rates, the Federal Reserve has maintained its current target range of 4.25% to 4.5%. Powell reiterated in January that the central bank would hold rates steady, citing inflation concerns and the need for economic stability.
Pompliano argues that Trump’s recent trade tariffs contributed to the market downturn, which, in turn, helped lower the 10-year Treasury yield from nearly 4.8% in January to 4.21%. A declining yield could make borrowing cheaper and potentially justify rate cuts, ultimately fueling economic activity.
Market Reactions and Investor Sentiment
Regardless of whether Trump’s administration is deliberately engineering the selloff, financial markets have seen notable declines. On March 10, the S&P 500 fell by 2.66%, while the Nasdaq-100 dropped 3.8%. Over the past month, these indexes have declined 7.32% and 10.7%, respectively.
Cryptocurrencies have been hit even harder. Bitcoin (BTC) has plunged 27.4% from its all-time high of $108,786, erasing over $1.2 trillion from the total crypto market capitalization since December 17.
Pompliano believes the standoff between Trump and Powell has turned into a “who blinks first” scenario. While Trump has not explicitly confirmed this strategy, he hinted at it in a March 9 interview with Fox News, stating: “Nobody ever gets rich when the interest rates are high because people can’t borrow money.”
Will the Fed Yield to Pressure?
The Federal Reserve has historically been resistant to rate cuts when inflation remains a concern, prioritizing price stability over political influence. However, if market conditions worsen and recession fears grow, some analysts believe the Fed may be compelled to act.
According to the CME FedWatch Tool, there is a 96% probability that the Fed will maintain its current rate at the upcoming March 19 meeting. However, the likelihood of a cut in May has reached nearly 50%.
Meanwhile, investor sentiment remains cautious. Digital asset investment products have recorded four consecutive weeks of outflows, with $876 million withdrawn in the past week alone. Over the past month, total outflows have reached $4.75 billion, reducing year-to-date inflows to $2.6 billion and bringing total assets under management down to $142 billion—the lowest level since November 2024.
As economic uncertainty continues, the question remains: Will Powell stand firm, or will market turmoil force the Fed to change course?
