The new chairman of the Federal Reserve brings the possibility of a raging bull market

2025-12-03 20:42:41

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Accelerate interest rate cuts, restore QE?

Author: Cookie, BlockBeats

On the prediction market Polymarket, the probability of Hassett being elected as the new Federal Reserve Chairman has risen to 86%, far ahead of other potential candidates for the position.

If all goes as expected, Kevin Hassett will be the next Federal Reserve Chairman, a favorite of Trump.

The actions of the Federal Reserve have always been a significant factor influencing the cryptocurrency market. So, if Hassett ultimately becomes the new Federal Reserve Chairman as the market expects, what impacts can be anticipated on the market?

Accelerated Rate Cuts

Hassett stated at the end of November that pausing rate cuts at this time would be "a very bad time," as the government shutdown has already hampered economic growth in the fourth quarter. He predicts that the government shutdown will lead to a 1.5 percentage point decline in fourth-quarter GDP. Meanwhile, he pointed out that the Consumer Price Index (CPI) in September showed inflation performing better than expected.

Earlier, on November 13, Hassett indicated that he expected fourth-quarter GDP to decline by 1.5% due to the government shutdown, seeing little reason not to cut rates.

Therefore, if Hassett becomes the new Federal Reserve Chairman, he is expected to push for faster rate cuts, potentially lowering the federal funds rate to below 3%, or even close to 1%, to stimulate economic growth and employment.

This is also what Trump wants to see.

Resuming QE

On December 1, the Federal Reserve officially ended its quantitative tightening (QT) policy, marking the conclusion of the balance sheet reduction process that began in 2022. Although some believe the effects may not be felt until early next year, expectations for liquidity easing have begun to materialize.

Hassett may be more tolerant of inflation, viewing the 2% inflation target as a flexible ceiling rather than a strict anchor. The focus would shift to employment and GDP growth, reducing reliance on data-dependent "gradual" decision-making in favor of more proactive pro-growth interventions.

In September of this year, Hassett stated in an interview with Fox Business that the U.S. is in a period of supply-side prosperity, where current interest rates are hindering economic growth and job creation in an economy without real inflation. He also mentioned that the U.S. is expected to achieve 4% GDP growth.

The perspective of prioritizing economic development over inflation control makes it likely that the Federal Reserve under Hassett will resume QE.

Impact on Bitcoin

Every candidate for Federal Reserve Chairman, whether or not they directly discuss cryptocurrency topics, will have a structural impact on the cryptocurrency industry. Hassett has a significant connection to the cryptocurrency sector; he has publicly held Coinbase stock worth millions and has served as a member of Coinbase's advisory board.

Additionally, he has participated in internal White House working groups on digital asset policy, advocating for space for innovation within the regulatory framework, and believes that cryptocurrency technology is an important variable affecting the future economic structure. He has stated that Bitcoin will "rewrite the rules of finance."

Hassett's background in cryptocurrency may reduce regulatory uncertainty and promote institutional engagement and the Federal Reserve's exploration of cryptocurrency integration. This could enhance Bitcoin's legitimacy and liquidity, potentially driving prices to new highs.

Many traders are optimistic about the market under Hassett's leadership, believing that the bull market will begin after he takes office, expected around mid-next year, making the second half of 2026 crucial for the cryptocurrency industry.