Trump’s Fed Lawsuit Threat Lifts Crypto on Rate Cut Expectations

Key Insights:

• Trump threatened a lawsuit against Fed Chair Powell over renovation costs and monetary policy.
• Markets anticipate potential interest rate cuts by the Federal Reserve later in 2025.
• Bitcoin, Ethereum, and XRP all posted strong gains as investor risk appetite increased.

President Donald Trump has threatened to allow a lawsuit against Federal Reserve Chair Jerome Powell over renovation costs and monetary policy. 

The announcement has fueled speculation that the Fed may face intensified political pressure to lower benchmark interest rates.

The lawsuit, if pursued, would relate to what Trump described as mismanagement of costly renovations at the Fed’s Washington headquarters. 

Powell and Fed officials have defended the projects and maintained that costs are justified, but the political dispute is now adding a new layer of uncertainty to the central bank’s policy outlook.

Crypto analysts view potential interest rate cuts as a catalyst for increased liquidity, which often benefits risk assets such as cryptocurrencies. 

While the Fed has kept rates steady throughout 2025, officials have signaled possible cuts later this year, and traders now see a higher probability of policy easing in September, October, and December.

Crypto Prices React to Rate Cut Hopes

Bitcoin traded at $119,775.08, gaining 0.74% over the last 24 hours and 5.34% over the past week. Ethereum outperformed, climbing 6.30% in the same period to $4,513.84, extending its seven-day rise to 26.31%.

XRP also advanced, adding 3.83% in 24 hours to reach $3.27, while Bitcoin dominance fell 1.42% to 58.99%. The drop in dominance reflects stronger capital rotation into altcoins, a trend that often accelerates when investors anticipate looser monetary conditions.

Open interest in the crypto derivatives market rose 3.72% to $203.37 billion, indicating increased speculative positioning. Gold futures gained 0.15% to $3,347.97, while the U.S. dollar index fell 0.44% to $97.927, signaling shifts in capital flows toward higher-risk or alternative assets.

The Fear & Greed Index stood at 69, showing strong market optimism and a willingness to take on more risk. Analysts note that if the Fed confirms a rate cut path, the crypto market could see further price appreciation, especially in high-beta assets like Ethereum and altcoins.