Bitcoin reacted swiftly late Monday after President Donald Trump said he is removing Federal Reserve Governor Lisa D. Cook “effective immediately,” invoking the Federal Reserve Act’s “for cause” clause and citing alleged false statements on 2021 mortgage applications. Cook rejected the move, said she will not resign, and has retained counsel, setting up an unprecedented legal clash over presidential power and Fed independence.
Cook, a Biden appointee, was reconfirmed in 2023 to a term running to January 31, 2038, and—as a member of the Board of Governors—holds a permanent vote on the FOMC. As the headlines hit Asia and Europe overnight, Bitcoin slipped alongside a wobbly dollar and US rates curve. At press time, BTC traded around $110,137, down roughly 2.4% on the session, after an intraday low at $108,666.
The legal stakes are enormous. Reuters reports Trump’s letter accuses Cook of “deceitful and potentially criminal conduct in a financial matter,” while legal scholars note that 12 U.S.C. § 242 permits removal “for cause” but does not define the term—and historically such standards hew to misconduct in office rather than pre-appointment personal matters. No president has previously attempted to remove a sitting Fed governor, and a court fight—potentially up to the Supreme Court—appears likely. Cook’s attorney Abbe Lowell called the action unlawful; Cook says she will continue performing her duties.
In his view, “short-term, it will introduce a little vol and maybe even a percent or two off the indices this week,” but over the coming months “the board of governors may be stacked with Trump appointees who will deliver MMT-like monetary policy with a conservative twist.”
MacroEdge’s Partner and Chief Economist Don Johnson underscored the policy channel: “We’re running an almost $3 trillion deficit — what do you think happens with a puppet Fed that cuts rates to 1%?”
Beyond Bitcoin, cross-asset price action reflected the shock. In early trading, the dollar index eased and the Treasury curve bear-steepened on fears that the Fed’s perceived independence could erode, with investors reassessing the path for rate cuts; risk assets and gold were volatile.
What matters for Bitcoin from here is the policy and liquidity regime that markets start to price. A successful test of presidential removal power that leads to a more politicized, easier-money Fed would validate the “fiscal dominance” and “hard-assets” thesis Mattison and Consorti articulate, supporting BTC via real-yield compression and currency-debasement hedging flows.
At press time, BTC traded at $110,273.
