US President Donald Trump is weighing legal action against Federal Reserve Chair Jerome Powell, tying the clash to his demand for an immediate interest rate cut.
The standoff comes after fresh inflation data showed consumer prices cooling more than expected, raising speculation over how the Fed’s next move could ripple into digital asset markets.
Bitcoin Rises On Trump-Powell News
Despite the political drama, Bitcoin price inched closer to $121,000, signaling strong market momentum.
Bitcoin price moving closer to the $121k level today. Source: CoinMarketCap
Renovation Costs Row Puts Fed Under Pressure
In a Truth Social post, Trump said he’s considering allowing a major lawsuit to proceed against Powell over the cost of Federal Reserve building renovations.
He claimed the project should have been a $50 million “fix-up,” not a $3 billion overhaul. Reports have disclosed that Powell was previously referred to the Department of Justice for alleged perjury tied to the same costs.
During a recent visit to the Fed to inspect the renovation, Trump once again pressed Powell to cut rates. The president accused the Fed chief of acting “too late” on key policy decisions, calling the damage “incalculable.”
Rate cuts are typically seen as bullish for risk assets, including Bitcoin and other cryptocurrencies, as they can weaken the US dollar and encourage more speculative investment.
President Donald Trump said he is weighing a lawsuit against Federal Reserve Chair Jerome Powell over the renovation of the central bank’s headquarters, a project whose cost overruns have drawn scrutiny. https://t.co/1WQIlBDlcb
— Bloomberg Law (@BLaw) August 12, 2025
Cooling CPI Data May Boost Rate-Cut Odds
The latest Consumer Price Index showed a 2.7% year-over-year rise in July, lower than the forecasted 2.8%. Monthly CPI eased to 0.2% from the previous 0.3%.
Based on reports, the data suggests Trump’s tariffs have not pushed inflation higher, undermining the Fed’s earlier caution on cutting rates. Trump said tariffs aren’t hurting consumers, claiming large amounts of cash are flowing into the US.
As of today, the market cap of cryptocurrencies stood at $4 trillion. Chart: TradingView
A rate cut in this environment could create a more favorable backdrop for crypto prices, as cheaper borrowing and weaker yields in traditional assets often drive more interest in alternative stores of value like Bitcoin and Ethereum.
Miran Backs Trump’s Economic View
Stephen Miran, Trump’s nominee for the Fed Board, told CNBC that inflation is “well behaved” and running at a 1.9% annualized rate since Trump took office. He stressed that CPI data rarely gets revised and there’s no sign of tariff-driven inflation.
His comments align with Trump’s position and add to the market’s expectations that the Fed may shift toward easing sooner. Crypto traders are watching closely, as a dovish Fed stance could ignite rallies across major tokens.
The combination of political heat, legal threats, and softer inflation data is putting Powell in a tight spot. If rate cuts arrive faster than expected, crypto markets could see a surge in momentum — and Bitcoin’s move toward $121,000 suggests investors may already be positioning for it.
Featured image from Meta, chart from TradingView
