As Jerome Powell’s term as Federal Reserve Chair approaches its conclusion in May 2026, speculation is intensifying around who will ultimately succeed him. President Trump has made no secret of his desire to replace Powell, citing frustrations over the Fed’s sustained high interest rates. This impending leadership transition has stirred significant interest—especially among investors, traders, and crypto market participants who closely monitor Federal Reserve policy shifts.
In this article, we’ll delve into the leading contenders for the next Fed Chair, explore their monetary policy leanings, and consider the potential implications for financial markets and cryptocurrencies.
Timing and Market Expectations
Unusually, markets are already attempting to price in the new Fed Chair’s policy stance, even though Powell’s term does not end for over a year. Betting markets like Poly Market currently assign about a 34% chance that a successor will be announced before December 2024—a scenario that would be well ahead of the historical 2-to-4-month lead times between announcement and inauguration. Such an early announcement would likely turn Powell into a lame-duck chair, with decreasing influence over monetary policy, thus heightening market volatility.
It’s worth noting that Trump himself nominated Powell back in November 2017 with several months remaining in Janet Yellen’s term, indicating early moves are far from unprecedented.
The Top Contenders: Who’s in the Running?
Betting markets and pundits have coalesced around four prominent candidates prominently in the conversation:
1. Christopher Waller – The Inside Dove
Currently a sitting Federal Reserve Governor since 2020, Christopher Waller is widely viewed as a frontrunner. His recent commentary leans toward tolerating short-term inflationary pressures, such as those driven by tariffs and energy price shocks, if it means safeguarding economic growth and employment. For example, he has signaled a clear path toward rate cuts later this year once inflation risks subside.
Waller’s pragmatic dovish stance is reflected in market responses: a recent speech of his caused the 2-year Treasury yield to drop sharply by 20 basis points within minutes. This has earned him the nickname “Trump’s shadow Fed chair” among some analysts, suggesting he may already be influencing policy from behind the scenes.
For markets, a Waller-led Fed would likely signal:
- Softer short-term Treasury yields and a flatter yield curve
- A lighter U.S. dollar (as previewed by June’s drop in the DXY following his remarks)
- Positive momentum for stocks and cryptocurrencies, buoyed by falling real yields and a weaker dollar
Importantly, while dovish, Waller has also supported Powell’s cautious approach regarding rate cuts in early 2024, lending him credibility as a balanced voice—not merely a political appointee.
2. Kevin Walsh – The Hawkish Critic
In stark contrast, Kevin Walsh brings a more hawkish perspective. A former Fed Governor (2006-2011) and longtime critic of the Fed’s expansive monetary policies, Walsh emphasizes the need to firmly bring inflation back to target before cutting rates—even if it means accepting weaker growth near term.
Walsh believes recent Fed communication has impaired credibility and that policymakers are relying on outdated data to guide decisions. Throughout his career, he has warned about the risk of monetary policy enabling unsustainable government spending, highlighting concerns about the blurring lines between fiscal and monetary disciplines.
If Walsh were appointed, markets might anticipate:
- Stronger real yields and a sturdier U.S. dollar
- Tighter liquidity conditions and more caution among investors
- Negative pressure on growth stocks and cryptocurrencies due to less favorable funding environments
While his hawkish tone may unsettle investors, some analysts argue his presence would serve as a necessary counterbalance, reminding markets that dovish outcomes are not the only possibilities.
3. Scott Bessant – The Liquidity Champion
As the current U.S. Treasury Secretary, Scott Bessant is somewhat of a wildcard given his unique position overseeing fiscal policy and government debt issuance. Wall Street has him near the top of the short list, with Bessant himself signaling openness to a rate cut by September 2024. Bessant’s approach centers on engineering liquidity through innovative debt issuance strategies—favoring short-term Treasury bills over long-term bonds to keep yields low—and advocating for regulatory tweaks to free up bank balance sheets. Collectively, these moves aim to flatten the yield curve and reduce funding costs.
In essence, Bessant’s policies could inject a “risk-on” vibe into markets, historically catalyzing rallies in equities and crypto assets. Critics view his stance as politically motivated, given his Treasury role, but Bessant maintains that market signals like the inverted yield curve (short-term yields below the fed funds rate) justify prompt policy easing.
An appointment of Bessant to Fed Chair could deliver a powerful “one-two punch” of monetary and fiscal accommodation, potentially sparking broad market optimism.
4. Kevin Hasset – The Supply-Side Advocate
Kevin Hasset, director of the National Economic Council and a close White House advisor, is also considered a strong contender, especially by certain betting markets. A supply-side economics advocate, Hasset argues rates should already be falling, positing that prolonged high rates risk choking off growth.
Hasset supports Trump’s “one big beautiful bill” stimulus vision coupled with easier money to unlock GDP growth. If installed as Fed Chair, markets could expect:
- A weaker U.S. dollar
- A steepening Treasury yield curve as short-term rates decline
- Broad rallies across stocks and cryptocurrencies
However, Hasset’s limited direct monetary policy experience and his role as a White House advisor raise concerns about Fed independence and optics, leading some institutional traders to hesitate in fully backing his nomination.
The Wild Cards and Market Impact
Beyond these four major names, other possibilities lurk as wild cards. For example, David Malpass, former World Bank president and Trump economic adviser, has expressed hawkish views but has low betting odds. Fed Governor Michelle Bowman is viewed as a moderate who might support rate cuts sooner.
The eventual nominee’s announcement—or the strategic delay thereof—will imminently affect market volatility across rates, currencies, stocks, and cryptocurrencies.
What It Means for Markets and Crypto
Broadly speaking, the next Fed Chair’s policy direction will decisively influence:
- Interest rate trajectories: Hawkish leadership could prolong higher rates; dovish leadership may accelerate cuts.
- Yield curve shape: Rate cuts combined with fiscal and regulatory measures could flatten or steepen the curve depending on approach.
- U.S. dollar strength: Dollar weakness tends to accompany dovish Fed signals; strength aligns with hawkish signals.
- Risk asset performance: Stocks and crypto generally thrive in looser monetary regimes with lower real yields, while hawkish policies could dampen enthusiasm.
Currently, market odds lean toward more dovish candidates like Waller, Bessant, or Hasset, signaling potential support for growth assets and cryptocurrencies. However, the presence of hawkish contenders like Walsh reminds traders that aggressive tightening policies remain possible.
Conclusion
The Federal Reserve stands on the cusp of a new chapter, with President Trump’s announcement of Powell’s successor likely to arrive sooner than expected. Christopher Waller, Kevin Walsh, Scott Bessant, and Kevin Hasset represent the leading faces in this pivotal battle over monetary policy’s future direction.
Each candidate carries distinct implications—from dovish growth orientation and liquidity boosts favoring crypto and stocks, to hawkish restraint emphasizing inflation control at the possible expense of risk assets.
Market participants would be wise to closely monitor Fed-related developments and be prepared for rapid shifts in sentiment once a nominee is officially named. Ultimately, the choice of Fed Chair will reverberate far beyond Washington, shaping the economic landscape and asset valuations globally for years to come.
Who do you think will be the next Federal Reserve Chair? Are you bullish or bearish on crypto depending on their potential policy outlook? Share your thoughts below as we continue to watch what promises to be a defining decision for markets worldwide.
By Wolfy Wealth - Empowering crypto investors since 2016
Get Wolfy Wealth Premium
Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile.
