VECStake Live - Powell Stands Firm: The "Two Popes" Dilemma Shaking Global Crypto Markets

 May 01, 2026 | VECS News

In a decision that breaks nearly 80 years of tradition, Federal Reserve Chair Jerome Powell announced he will remain on the Board of Governors after his chairmanship ends on May 15, directly defying political pressure from former President Donald Trump and setting the stage for a historic power struggle that is rippling through digital asset markets .

The Decision to Stay

Amid ongoing threats of criminal investigations regarding the Fed’s headquarters renovation costs, Powell declared he had "no choice" but to stay. "I had long planned to be retiring," Powell stated in his final press conference as Chair, "but the things that have happened in the last three months have left me no choice but to stay." He will now serve as a Governor until at least 2028, a move Treasury Secretary Scott Bessent criticized as a "violation of all Federal Reserve norms" .

The "Two Popes" Scenario

The financial world is now looking at an unprecedented "Two Popes" dynamic. Powell will hold a permanent vote on the FOMC while Kevin Warsh, Trump’s pro-crypto nominee expected to take the helm, tries to implement "regime change." Analysts warn that this dual leadership could paralyze urgent monetary policy decisions, as the Board may split between loyalists to the old Chair and the new one .

Implications for Interest Rates

For crypto investors, the core issue is liquidity. Warsh has signaled a faster balance sheet runoff ("quantitative tightening") while Trump demands immediate rate cuts. However, with inflation at 3.3% due to Middle East tensions, Powell’s lingering presence as a Governor is expected to slow down Warsh’s ability to pivot to a dovish policy. Nomura’s David Seif noted, "It probably means it will take Warsh a little bit longer to build the consensus" .

Bitcoin’s Immediate Reaction

The market’s response was one of confusion rather than panic. Bitcoin initially dipped to around $76,000-77,000 following the announcement, as the implied probability of a 2026 rate cut collapsed to nearly 1% . The lack of a decisive rally suggests that the market is pricing in a prolonged period of high rates, a historically bearish signal for high-risk assets.

The End of the "Powell Put"

Benjamin Cowen, the analyst famously known for predicting the 2021 crypto crash, issued a stark warning to the community. While many crypto natives celebrated the departure of Gary Gensler and initially welcomed Warsh, Cowen argues that Powell’s exit creates a credibility vacuum. "Now that people celebrate Powell's removal as chair of the Federal Reserve, it makes me think history will repeat itself once again," Cowen posted on X, suggesting markets were "better off with Powell" .

A Friend to the Industry?

Paradoxically, Powell’s tenure was quietly constructive for crypto. In June 2025, the Fed under Powell removed "reputational risk" from bank supervision, clearing the path for banks to serve crypto clients. Powell also famously described Bitcoin as a digital alternative to gold. His successor, Warsh, holds over $100 million in crypto assets, yet analysts fear that the loss of institutional credibility under Powell could outweigh Warsh’s personal pro-crypto stance .

Professional Expert Opinion

Economists are divided on the long-term impact. Beth Ann Bovino, Chief Economist at U.S. Bank, views the high number of dissents at the last FOMC meeting as a sign of deep independence. However, David Wilcox, a former senior Fed economist, expressed concern for Powell personally, telling the Wall Street Journal that "history has a habit of sometimes being cruel." The consensus is that the Fed’s independence is now the primary asset at risk .

The Stablecoin Liquidity Crunch

A specific threat to the crypto structure involves stablecoins. With the Fed likely to maintain tight liquidity through 2027, the demand for T-bills—the primary backing for USDT and USDC—may shift. FinanceFeeds analysts point out that a "Warsh administration that resists rate cuts is... the better outcome for Circle’s near-term P&L," but overall, tighter dollar liquidity reduces the fuel for DeFi yields .

Conclusion

Jerome Powell chose to stay not for power, but for institutional integrity. As he takes a back seat as a "low profile" Governor, the crypto market enters a phase of high uncertainty. The "Trump trades" euphoria is colliding with the reality of a divided Federal Reserve. For investors, the era of easy predictions is over; the battle for the Fed’s soul has just begun.