Data from the market prediction platform Polymarket is continuously fluctuating, with the probability of Kevin Hassett being elected as the next Federal Reserve Chair once exceeding 80%. Meanwhile, the price of bitcoin has climbed back above $93,000 amid expectations of interest rate cuts.
The winter night wind outside the Federal Reserve building is biting, but in front of global cryptocurrency trading terminals, excitement is rising due to a piece of news. The current Chair, Jerome Powell, will see his term end in May 2026, and the White House has stated it will announce a nominee before Christmas 2025.
The market is focused not only on the personnel change, but also on the potential shift in U.S. monetary policy and global liquidity. The Federal Reserve Chair, through the two "visible hands" of monetary policy and regulatory framework, directly influences the survival environment of the crypto industry and the flow of trillions of dollars in capital.
I. The Strategic Significance of a Federal Reserve Leadership Change
● The replacement of the next Federal Reserve Chair is regarded as a decisive factor in reshaping the macro environment of the cryptocurrency industry for the next four years. This personnel change will not only affect short-term price fluctuations and market liquidity, but is also a key turning point for the crypto industry to move from a "marginal asset" to "mainstream finance."
● According to public information, the Trump administration plans to announce a nominee before Christmas 2025. Although the current Chair Powell's term does not end until May 2026, the market's judgment of the new Chair's policy stance will come much earlier than the actual policy adjustments.
● The market's reaction has been swift. After news broke about the popular candidate Hassett, U.S. Treasury yields fell, reflecting expectations of improved liquidity.
II. Policy Shift: Liquidity Expectations and Regulatory Reshaping
● The Federal Reserve Chair, by guiding the consensus of the Federal Open Market Committee and making public statements, has a decisive influence on the direction of monetary policy. As of early December 2025, the FOMC has voted to lower the federal funds target rate range to 3.75%–4.00%, entering a rate-cutting cycle.
● Historical data shows that the performance of the crypto market is highly correlated with the Federal Reserve's interest rate policy. When the Fed entered a rate-hiking cycle in 2018, the price of bitcoin plummeted by about 80%; after the Fed adopted aggressive rate cuts and quantitative easing in the wake of the 2020 pandemic, bitcoin soared from around $7,000 to a historic high of $69,000.
● The real drivers of liquidity are closely related to the movement of the U.S. Dollar Index. Every major bitcoin bull market has occurred during periods of a falling Dollar Index, while bear markets have coincided with a rising Dollar Index.
III. The Policy Spectrum from Hassett to Warsh
The differences among the five main candidates regarding monetary policy and digital asset regulation form the core variables for the market's future development path. The table below compares the policy stances of the main candidates:
● Hassett is seen as the most crypto-friendly candidate. He has publicly stated that if he were Chair, he would "cut rates immediately". As a core economic advisor to Trump, he not only advocates leaving room for innovation in regulation, but has also served as an advisor to Coinbase and holds shares in the exchange.
● In contrast, Kevin Warsh represents the most hawkish stance. He advocates prioritizing inflation prevention and supports tightening rates and reducing the central bank's balance sheet.
IV. The Far-reaching Impact of the GENIUS Act
The GENIUS Act was signed into law by the President in July 2025, establishing the first federal regulatory framework for payment stablecoins in the United States.
● The Act requires stablecoin issuers to hold U.S. Treasury bills, bank deposits, or similar short-term highly liquid assets equivalent to the amount issued as 100% reserve backing. Issuers must also publicly disclose the composition of reserve assets monthly and submit an annual independent audit report.
● One of the most structurally significant provisions is that the Act explicitly prohibits stablecoin issuers from paying interest or returns to holders in any form. This provision aims to prevent stablecoins from being viewed by the market as "shadow deposit" products, which could trigger financial stability risks or circumvent banking regulation.
● Because the GENIUS Act requires stablecoins to be backed by U.S. Treasuries or dollars, the stablecoin market has become an unignorable participant in the U.S. Treasury market.
V. The End of Quantitative Tightening and Market Response
● On December 1, 2025, the Federal Reserve officially ended its quantitative tightening program, freezing its balance sheet at $6.57 trillion. This decision marks a key turning point in monetary policy and could reshape the bitcoin and cryptocurrency markets.
● Market analysts are comparing the current situation to August 2019, when the Fed last ended quantitative tightening. That policy shift coincided with a major bottom for altcoins and foreshadowed bitcoin's rise from about $3,800 to $29,000 within 18 months.
● The current environment differs from 2019. Interest rates have been lowered to a range of 3.75% to 4.00%, providing more accommodative conditions. The overnight reverse repo facility has dropped from $2.5 trillion to nearly zero, removing a key liquidity buffer that once cushioned the market.
VI. ETF and the Acceleration of Integration with Traditional Finance
● Institutional adoption has accelerated significantly. Spot bitcoin ETFs have accumulated over $50 billion in assets, creating a sustained demand channel that did not exist before. Companies like BlackRock and Fidelity continue to expand their exposure to cryptocurrencies through regulated instruments.
● Positive regulatory developments have also added momentum to bitcoin's rise. The SEC Chair announced plans to develop new "innovation exemptions" aimed at modernizing the digital asset framework and clarifying rules for issuance, custody, and on-chain trading.
● Vanguard Group's policy shift may have accelerated this inflow momentum. Bitcoin's rebound has coincided with the CBOE VIX index remaining near 16.54, indicating calm market conditions despite increased trading activity.
VII. From Short-term Volatility to Long-term Trends
● On December 4, 2025, bitcoin traded at $92,949, up 4.1% in the past 24 hours, rebounding sharply from Monday's low of $84,000.
● From a technical perspective, bitcoin faces a direct resistance zone between $94,000 and $98,000, with previous distribution areas coinciding with the 200-hour moving average. Breaking through this range could trigger an extension toward $100,000, a psychological barrier that previously acted as a cap during the August rally.
● Analyst Matthew Hyland has identified a historical trend: after periods without quantitative tightening, altcoins have continued to rise for 29 to 42 months. The OTHERS.D/BTC.D ratio is currently trading at 0.36, leaving room for consolidation before altcoins typically regain momentum.
The curves on the bitcoin price chart are being redrawn. As it breaks through the $100,000 psychological threshold again, the global cryptocurrency market cap has quietly surpassed $3.3 trillion. Wall Street traders are watching the countdown to the Federal Reserve's rate decision while adjusting their portfolios.
Institutional funds continue to flow in through ETF channels, with millions of dollars per day seeping from the traditional financial system into this once-marginalized market. Inside the Federal Reserve building, the selection of the next Chair has entered its final stage, and his monetary policy stance will determine the opening and closing of the global liquidity valve for the next four years.
The world of cryptocurrency stands at the crossroads of tradition and innovation, centralization and decentralization, and the change of Federal Reserve Chair may be the hand that tips it in one direction.
