Bitcoin and the Fed's 2026 Transformation: Are Markets Prepared?

Summary:
Macro strategist Alex Krüger discusses potential changes in the Federal Reserve, predicting a significant shift in monetary policy that could impact Bitcoin and other risk assets. With expectations of a new dovish leadership under Kevin Hassett, Krüger warns that investor sentiment may not be ready for these changes in 2026, which he believes will be pivotal for markets.

Key Takeaways:

Krüger links Bitcoin’s future to anticipated changes at the Federal Reserve.
A possible nomination of Kevin Hassett as Fed Chair could lead to lower interest rates.
Current market sentiments may not reflect the potential for dramatic shifts in Fed policy.
Bitcoin's dynamics may change significantly under a new Fed regime focused on growth.

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Understanding the Future of the Federal Reserve

In a detailed post, expert Alex Krüger asserts that Bitcoin's next major phase is closely tied to the upcoming changes at the Federal Reserve, suggesting that investors may be undervaluing how much U.S. interest rates could decline if a Trump-supportive central bank is put in place. He argues in his article titled "2026: The Year of the Fed's Regime Change" that the Federal Reserve as we know it will undergo a transformation by 2026, driven by a new, more accommodating leadership led by Kevin Hassett. Krüger believes that this shift will significantly influence risk assets broadly, particularly Bitcoin, despite current market conditions suggesting stability.

Potential Changes at the Federal Reserve

Krüger’s forecast hinges on expected personnel changes within the Fed. He highlights that prediction platform Kalshi gives a 70% probability for Hassett to be appointed as Fed Chair, describing him as a pro-growth figure who believes that maintaining high real interest rates has become more about political stubbornness than economic sense.

Adding to this narrative, Trump hinted during a White House briefing that he would announce his choice for the Fed Chair "early next year,” suggesting Hassett as a likely candidate after stating that the search has narrowed down to one person.

To clarify how this shift in leadership might affect Fed policies, Krüger references Hassett's previous statements. Hassett has stated that any decision by the Fed not to cut rates in December would stem from political bias against Trump. He believes that if he were part of the Federal Open Market Committee (FOMC), he would advocate for lower interest rates compared to current Chair Jerome Powell.

The path forward under Hassett, according to Krüger, entails being appointed as a Fed governor to replace Stephen Miran and eventually stepping up to the chair position when Powell's term concludes in May 2026. Powell may follow tradition and resign early, allowing Kevin Warsh—a like-minded ally championing reforms—to take a position that would bolster this dovish trend in the committee.

Implications for Bitcoin

The combination of this new Fed leadership could significantly impact Bitcoin and other risk assets. Krüger warns that Hassett’s policies could lead to lower real discount rates, ultimately spurring a possible rise in growth stocks. For Bitcoin, which Krüger describes as the most direct reflection of these macro changes, the potential for a price surge exists, but recent psychological barriers may pose challenges.

Despite current fears surrounding Bitcoin's volatility and negative market responses to unfavorable news, Krüger is optimistic that a Hassett-led Fed aligned with Trump’s deregulatory approach could shift market attitudes favorably by 2026.

At the time of writing, Bitcoin was trading at $92,862.

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