Trump Removes Cook, Crypto Market Faces Chain Reaction: From Central Bank Independence to the Butterfly Effect

SuperEx_Media ✔️ · 2025-08-28T09:05:49Z

#Trump #Cook #Crypto

Disclaimer: This article provides an in-depth analysis of market hot topics only. It does not involve or represent any political stance or political views.

A butterfly flaps its wings in South America, and the result might be a tornado in Texas. At this moment, the butterfly effect has been vividly demonstrated: what seemed like a trivial mortgage issue triggered a storm leading to the attempted removal of a Federal Reserve Governor.

This is essentially a political clash over “who gets the final say”: the President seeking to fire a Governor, while the Fed insists that “Governors cannot be arbitrarily dismissed.” What looks like a power struggle quickly spilled over into financial markets — and even shook the crypto world.

Some joked: “The Fed’s meeting minutes matter less than one sentence from Trump.” Others warned: “The politicization of crypto markets has reached a new high.”

So how exactly did this “Trump vs. Cook” drama unfold, and why did it ripple through both Wall Street and crypto? Let’s break it down step by step.

The Timeline: Trump’s Attempt to Remove Cook

1. The Trigger: Mortgage “Fraud” Accusation → Trump Strikes

The story didn’t begin with monetary policy, but rather with what seemed like a trivial “butterfly” — a home loan.

According to media reports, FHFA Director Bill Pulte accused Fed Governor Cook of applying for mortgages on two properties, declaring each as her primary residence to secure lower interest rates. Cases like this aren’t rare in the U.S., but when it involves a high-profile official, it becomes political ammunition.

Trump seized the opportunity. On social media, he immediately amplified the report and bluntly declared: “Cook should resign immediately.”

Remember, Trump has long held grievances against the Fed. Since taking office, he’s repeatedly blasted the central bank for not cutting rates, even calling out Chair Powell as “slow to act.” After years of stalemate, Trump shifted his sights from Powell to the Governors. Cook — neither his appointee nor free of controversy — became the perfect target.

Thus, Trump moved quickly, announcing his intention to remove her.

2. The Fed Pushes Back: Governors Cannot Be Arbitrarily Fired

But here’s the key question: Can the President actually fire a Fed Governor?

The answer: not so simple.

Under the Federal Reserve Act, Governors serve 14-year terms precisely to guarantee central bank independence and shield it from short-term political cycles. Legally, the President can only remove a Governor “for cause.”

But what counts as “cause”? The law doesn’t clearly define it. Typically, only serious misconduct or major ethical violations qualify. Whether Cook’s mortgage issue rises to that level is for the courts to decide.

The Fed responded swiftly:

A Governor’s term is fixed; the President cannot dismiss at will.
Cook remains a sitting Governor and will participate in rate decisions unless a court rules otherwise.
Cook, through her lawyer, announced plans to sue immediately to defend her rights.

This means at the upcoming Sept. 16–17 FOMC meeting, Cook will almost certainly still be present. Even if Trump ultimately prevails, his action won’t take immediate effect.

3. Trump’s Real Goal: Rate Cuts

Trump’s public feud with the Fed isn’t really about Cook — it’s about pushing rate cuts.

For years, Trump has argued that high rates are shackles on the U.S. economy, hurting stocks and jobs. He wants easier money to fuel growth, lower government debt costs, and — politically — to showcase a booming economy under his watch.

Markets understand this logic: rate cuts lower financing costs, boost equities and housing, and ease fiscal stress. For a president who equates prosperity with political strength, this is vital.

But Chair Powell and most Governors insist on a “data-dependent” approach: only if inflation subsides and employment holds steady will cuts be considered. This cautious stance clashes directly with Trump’s political urgency.

So Trump bypassed policy debate and turned to personnel and public pressure instead. By targeting Cook, he sent a blunt signal: “If you don’t comply, I’ll reshape the Fed’s power structure step by step.”

The risks?

Market doubts about Fed independence could rise, raising long-term inflation expectations.
Wider rifts inside the Fed would make future policy harder to predict, fueling volatility.

In short: Trump’s rate-cut gamble is a double-edged sword. Short-term, he may win cheers from markets and voters. Long-term, the Fed’s credibility — and the dollar’s global standing — may quietly erode.

Market Reaction: Stocks and Crypto Rally

While the political drama unfolded, markets already voted. On the very day Trump declared Cook’s ouster and hinted rate cuts were inevitable:

U.S. equities surged: Dow +1.89%, S&P 500 +1.52%, Nasdaq +1.88%.
Crypto soared even more: BTC rebounded to $117,000; ETH broke above $4,800, and by Aug. 25 touched a new ATH at $4,956.

Why? Because traders read Trump’s move as political pressure that makes rate cuts nearly certain. Liquidity easing = risk assets rally. Both Wall Street and crypto followed the script.

Ripple Effects in Crypto: Capital Shifts & New Hotspots

For crypto, the impact goes beyond price spikes — it’s about capital allocation.

1. BTC flows into ETH

On-chain data shows about $2B in BTC rotated into Ethereum during the dip-and-rally cycle, suggesting institutions see ETH as a stronger play in this environment.

2. Institutions quietly accumulate ETH

In the last 12 hours, BitMine received 131,736 ETH from custodians like BitGo, Galaxy Digital, and FalconX — clear evidence of big money doubling down.

3. New project tokens get a boost

Liquidity expectations also lifted certain DeFi governance tokens, which spiked in volume and price.

This is the butterfly effect in action: one political move, cascading into global crypto flows.

Conclusion

Some say Trump and crypto are in a “mutual exploitation” relationship: crypto leverages Trump’s publicity and policy shocks, while Trump points to market rallies — stocks and coins alike — as proof he’s “reviving the economy.”

This Cook episode is just the latest example.

Regardless of how the courts rule, Trump has already succeeded in putting the Fed on the political stage — and dragging crypto into the storm of power struggles. Perhaps that was his real goal all along.