The Impact of Trump’s Appointees on Bitcoin

Welcome to our Institutional Top of Mind with 10x Research, with our Macro Shifts series examining the forces reshaping the crypto landscape in 2025. Each analysis offers institutional investors a data-driven perspective on the regulatory environment, political influences, market infrastructure development, and macroeconomic drivers that matter most. Join us as we analyze these macro shifts through an institutional lens, providing deeper insights for sophisticated market participants navigating this rapidly evolving space.

In our second installment, we examine how Trump's key financial appointees - Fed Chair Powell, Treasury Secretary Bessent, and Commerce Secretary nominee Lutnick - are reshaping the macro landscape for digital assets through their varied policy influences across different time horizons.

TLDR:

• For Bitcoin traders, the three Trump appointees—Fed Chair, Treasury Secretary, and Secretary of Commerce—hold significant influence, each impacting Bitcoin over different time horizons.

• From a duration perspective, the Fed Chair’s decisions can affect Bitcoin prices in the short term, often driving market movements over months due to interest rate changes and monetary policy.

• The Treasury Secretary’s actions, particularly around funding and repo activities, have a medium-term impact, influencing liquidity and market conditions over several quarters.

• Meanwhile, the Commerce Secretary’s policies can shape the cryptocurrency landscape over the long term, fostering structural changes that may benefit Bitcoin for years.

The three most critical appointees for Bitcoin traders are the Fed Chair, the Treasury Secretary, and the Secretary of Commerce. Fed Chair Jerome Powell, initially appointed by Donald Trump on November 2, 2017, is set to remain in his role until May 2026, ensuring continuity for the next 16 months. Any attempt by Trump to influence or replace the Fed Chair could threaten the central bank’s independence.

Powell’s comments on interest rates have historically created significant volatility in financial markets, often triggering notable price movements in Bitcoin. Traders closely monitor his policy statements, as they can provide insights into macroeconomic conditions that directly impact Bitcoin’s price dynamics.

Bitcoin experienced significant price movements in response to Federal Reserve policy shifts throughout 2024. At the end of January, Bitcoin surged when the Fed removed language suggesting a commitment to raising interest rates until inflation hit the 2% target. By the March Fed meeting, Bitcoin had climbed sharply. However, despite the Fed signaling three rate cuts for the year, Bitcoin entered a six-month consolidation phase as the Fed provided no clear timeline for implementing those cuts.

It wasn’t until September, when the Fed delivered its first rate cut, that Bitcoin broke out of its consolidation and rallied steadily until the December meeting. At that point, the Fed projected heightened uncertainty regarding additional rate cuts, which tempered Bitcoin's momentum. A stronger U.S. dollar, driven by a hawkish Fed maintaining high interest rates, could halt Bitcoin’s upward momentum.

Following the Fed's communication, traders could have positioned themselves effectively, aligning their strategies with key indicators such as inflation and central bank announcements. The bond market suggests limited scope for further rate cuts, emphasizing the importance of monitoring Fed policy decisions and their underlying economic metrics. This dynamic underscores the critical relationship between monetary policy and Bitcoin’s price performance.

Trump’s Treasury Secretary, Scott Bessent, a seasoned macro hedge fund trader, inherits a challenging treasury environment characterized by a shift from long-term debt to shorter-term bills. This shift has injected liquidity into financial markets, benefiting risk assets such as stocks and Bitcoin. However, it has also increased uncertainty, as the reliance on shorter-term debt necessitates more frequent rollovers, making the Treasury more vulnerable to market fluctuations.

The timing of these rollovers becomes critical, forcing the Treasury to issue debt under potentially unfavorable conditions, especially when yields are high. Additionally, shorter-term debt is more sensitive to interest rate fluctuations, increasing the Treasury's exposure to market volatility. In contrast, longer-term debt is influenced more by growth prospects and demand from pension funds.

Exhibit 1: BTC-USDT (LHS) vs. U.S. 10-Year Treasury Yield (RHS)

Over the past 18 months, the Federal Reserve’s reverse repo facility has declined by $2.2 trillion, reaching $132 billion, adding liquidity to the system by freeing up cash. However, Bessent has flagged the heavy reliance on short-term bills as a significant risk, citing heightened volatility and refinancing exposure. To mitigate these risks, he may advocate for a return to issuing longer-duration debt, which could stabilize refinancing schedules and be liquidity-negative in the short term. This potential strategy underscores the delicate balancing act required to manage Treasury operations amidst fluctuating interest rates and economic conditions. While numerous factors influence Bitcoin's price, a tightening liquidity environment could harm its performance.

Exhibit 2: BTC-USDT (LHS) vs. U.S. Dollar Index (RHS)

Trump's nomination of Howard Lutnick as Secretary of Commerce marks a potentially positive development for Bitcoin and the broader cryptocurrency market. Lutnick, a prominent advocate for digital assets, has extensive experience managing cryptocurrency portfolios through his firm, including overseeing Tether's U.S. Treasury and bond holdings. As Commerce Secretary, Lutnick is well-positioned to advocate for policies that facilitate the integration of cryptocurrencies into the U.S. financial system.

His leadership could drive initiatives to foster innovation, streamline regulatory frameworks, and encourage investment in blockchain technologies. These efforts would enhance Bitcoin's legitimacy as a mainstream financial asset and accelerate its adoption by creating a more supportive environment for market participants. Such measures could attract broader institutional and retail interest, potentially driving increased participation in the cryptocurrency ecosystem.

Given the current economic landscape, traders should remain vigilant about shorter-term risks associated with Fed policy, particularly the potential for tighter monetary conditions. Medium-term liquidity risks stemming from Treasury decisions also warrant close monitoring, as they could significantly influence market dynamics. However, the longer-term outlook for Bitcoin appears optimistic, supported by the Commerce Secretary’s potential to champion pro-crypto initiatives that promote broader adoption and integration of digital assets.

Bitcoin's performance is often closely tied to the broader economic context, particularly the interplay between Treasury yields, the U.S. dollar, and economic growth. Historically, Bitcoin tends to perform well when both Treasury yields and the U.S. dollar are declining, as long as economic growth remains strong. While fostering such conditions seems to align with the priorities of Trump's appointees, the immediate challenge lies in navigating the impact of tighter liquidity in the near term. Understanding these varying time horizons and their implications is essential for effectively managing Bitcoin's price dynamics.

OKX conversation on Telegram

For the latest insights, updates, and announcements beyond what's included in our bi-weekly newsletter, head over to our OKX Institutional Telegram channel.

As a private, members-only group, our Telegram channel allows for real-time dialogue where we can discuss and share market coloring, product roadmaps, and more with our valued institutional clients and partners.

Disclaimer: This publication is issued in 10x Labs Limited (“10x Research”). The information provided in the publications are meant purely for informational purposes and should not be relied upon as financial advice. None of the information contained here constitutes an offer, or a solicitation of an offer, to purchase or sell any securities, financial instruments or strategies, or to make any investments. Any opinions expressed are intended to be mere opinions and not investment advice, and nothing herein should be construed as financial, investment, legal or tax advice or advice of any sort. 10x Research does not provide individually tailored investment advice. You are advised to consult with your own professional advisers and to make your own independent decisions regarding any securities, financial instruments, strategies or investments. Any opinions are personal to the author and may be subject to change. These may not necessarily reflect the opinion of 10x Research or its affiliates, officers or employees. This publication has been prepared based upon information, including market prices, data and other information, from sources believed to be reliable and we make no representation and assume no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this publication. This publication may contain data from third party sources and may contain inaccurate or out-of-date data. The analysis of political events and their potential impact on digital assets is speculative and should not be considered definitive or predictive. Investment in digital assets carries a high level of risk and may lead to a total loss of capital. To the extent applicable, 10x Research asserts legal ownership and copyright over this publication. This publication may not be used, redistributed or retransmitted, in whole or in part, or in any form or manner, without the express written consent of 10x Research. Any unauthorized use is prohibited. Receipt and review of this information constitutes your agreement not to use, redistribute or retransmit the contents and information contained in this publication without first obtaining express permission from an authorized officer of 10x Research. Copyright 2025 10x Labs Limited. All rights reserved.