The term of Jerome Powell, the chairman of the Federal Reserve, will end this May. However, users of prediction markets are already betting on who President Trump will nominate as his successor.
At one point, Kevin Hassett was considered a strong candidate, but now Rick Reader, the chief investment officer of BlackRock, is gaining momentum.
The market is paying close attention to Trump's remarks in Davos
Mr. Reader currently enjoys strong support on prediction platforms. On both Polymarket and Kalshi, the probability of him being nominated is reported to be 45%, surpassing other candidates such as Federal Reserve Governor Christopher Waller and former Fed official Kevin Warsh.
At first glance, considering the flow of the Trump administration's previous suggestions for Fed nominees, it seems like a bet without novelty. However, in a recent CNBC interview at the World Economic Forum in Davos, President Trump described a BlackRock executive as "very competent."
"I want to say we narrowed it down to three, but in reality, it's two. No, in my opinion, it's probably narrowed down to one," President Trump stated.
Speculation is growing that Mr. Leader is the most likely candidate.
According to Bloomberg, Mr. Leader has characteristics that set him apart from other candidates. Unlike Mr. Waller and Mr. Warsh, he has no previous experience working at the Fed and is seen as having fewer ties to the institution. He has also shown willingness for reform at the Fed.
However, this is not the first time President Trump has stated that he has already decided on a candidate.
Reasons why Mr. Hasset has lost support
A month ago, Mr. Hasset was rumored to be a strong candidate to succeed Mr. Powell.
As the chairman of the National Economic Council (NEC), he has consistently shown a proactive stance on rate cuts and has aligned with President Trump's economic policies.
In light of this alignment of policies, President Trump initially strongly supported Mr. Hasset's appointment as Fed chair. However, less than two weeks ago, he changed direction and indicated his intention to keep Mr. Hasset as NEC chairman.
According to Polymarket, the probability of Mr. Hasset being chosen has decreased to 8%.
Regardless of who ultimately becomes Mr. Powell's successor, President Trump strongly desires interest rate cuts. In that case, the cryptocurrency market may be affected the earliest.
The impact of the Fed's interest rate cuts on the cryptocurrency market
Rate cuts generally lead to an expansion of liquidity. For consumers, this directly translates to lower borrowing costs and often leads to an increase in risk appetite.
If the Fed continues to cut rates under the new regime, there is a possibility that Bitcoin and Ethereum may experience a tailwind for price increases again.
However, the conditions under which rate cuts occur are also important.
In recent months, the Trump administration has frequently questioned the Fed's independence, which has led to caution in the bond market and increased volatility in the cryptocurrency market.
If President Trump continues to pressure the next Fed chair, the outlook for the cryptocurrency market may worsen.
