Kevin Hassett’s rise as the leading contender to replace Jerome Powell in 2026 has triggered an unusual divide across financial markets: crypto traders are cheering, while bond investors are warning of destabilizing rate cuts.
The split is sharpening as new reports detail private concerns raised to the US Treasury.
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Bond Markets Warn of Aggressive Cuts
Bond investors have privately told the Treasury Department that they are concerned Hassett would push for rapid, politically aligned rate cuts, according to the Financial Times.
The discussions, held in November with Wall Street banks, major asset managers, and members of the Treasury Borrowing Advisory Committee, revealed a consistent fear: a Hassett-led Fed may prioritize the administration’s preferences over inflation control.
The report indicates that investors worry that Hassett could advocate indiscriminate rate cuts even if inflation remains above the 2% target.
Participants in the meetings also pointed to earlier briefings where Hassett had focused on non-market political topics, raising questions about the Fed’s independence.
Prediction markets now give Hassett around 75% probability of becoming the next Fed Chair, far above rivals Christopher Waller and Kevin Warsh.
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Crypto Markets See a Dovish Tailwind
Crypto markets are taking the opposite view. Traders interpret Hassett’s stance as a green light for faster easing, more liquidity, and a weaker dollar, a combination that historically supports Bitcoin, Ethereum, and high-beta altcoins.
Hassett has publicly said he would cut rates immediately if he led the Fed. That dovish posture contrasts sharply with Powell’s cautious, data-anchored approach, which has kept real yields elevated and risk appetite subdued.
His background also fuels optimism in digital-asset circles. Hassett previously served as an advisor to Coinbase and holds over $1 million in COIN stock, creating both conflict-of-interest questions and expectations of a more crypto-friendly regulatory environment.
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Bitwise strategist Juan Leon recently argued that a Hassett-led Fed would be “strongly bullish,” citing his pro-crypto regulatory work and his history of criticizing current rates as “too high.”
Political Pressure Intensifies the Divide
President Trump has steadily amplified his criticism of Powell and has repeatedly hinted that he has “already decided” on the next Fed Chair. He is expected to announce the successor soon.
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At the same time, reports indicate that Trump may elevate Treasury Secretary Steven Mnuchin to become his top economic adviser if Hassett is appointed. This highlights the administration’s effort to realign economic leadership around a more aggressive growth agenda.
The political dynamics add to bond-market anxiety. Investors fear a scenario in which the Fed shifts toward rapid easing while inflation remains sticky. Such a move would weaken central-bank credibility just as deficits and issuance remain at historically high levels.
Hassett’s candidacy has crystallized a rare market divergence: crypto is pricing in liquidity-driven upside, while bonds are bracing for policy risk and volatility.
With Powell’s term ending in May 2026 and final interviews underway, the next several weeks will shape expectations for both monetary policy and digital-asset markets.
An official nomination is expected early next year. Until then, investors will continue to trade the growing possibility of a dovish, crypto-aligned Fed and the pushback from traditional finance that comes with it.