As speculation grows around the eventual exit of the Federal Reserve chair Jerome Powell, parts of the crypto market have begun to frame the transition as a positive turning point. However, not everyone is convinced the outcome will be bullish in the long run.
One such analyst, Benjamin Cowen, shares this perspective: markets may celebrate leadership changes in the short term, but the long-term consequences could tell a very different story.
The Gensler Precedent and Resulting Credibility Shift
Cowen points to the departure of Gary Gensler in January 2025 as a recent example. At the time, Bitcoin was trading around $109,000, with many in the industry welcoming the exit of an SEC chair widely seen as restrictive.
However, the months that followed were not as celebratory for the crypto community. While the immediate reaction saw many digital assets climb to new heights by August, Bitcoin is now trading around $76,000.
Why the Bitcoin Four-Year Cycle Top “Feels Different”: Benjamin Cowen
Cowen argues that the post-Gensler environment introduced unintended consequences. According to his analysis, the regulatory vacuum opened the door to an era of grifting in crypto. Influencers and even political figures began launching memecoins and speculative tokens, often with little oversight. The result was a misallocation of capital, as liquidity flowed into short-lived or low-quality assets rather than more established parts of the market.
The result was volatility along with a gradual erosion of trust. Cowen’s argument here is that markets rely not only on liquidity but also on credibility. Without structure and oversight, speculative excess can undermine long-term confidence in the industry.
Powell’s Exit, Macro Risk, and Crypto Market Impact
Cowen suggests a similar dynamic could emerge if Powell exits the Federal Reserve. While some market participants expect new leadership to bring more accommodative policies, the longer-term implications may be more complex.
Despite its decentralized ethos, crypto narratives depend on a stable and credible financial framework. Interest rates, liquidity, and risk appetite continue to play a major role in price movements. Therefore, if the Federal Reserve’s independence weakens, if it becomes perceived as just another branch of the executive arm, it could erode trust in the institution itself. A shift toward politically influenced monetary policy would introduce uncertainty across markets, especially crypto.
There is also a familiar pattern in markets: leadership changes often trigger short-term optimism, particularly if they signal looser policy. However, those same conditions can lead to excess, as capital flows into speculative areas without clear constraints.
As it stands, Jerome Powell chaired his final Federal Open Market Committee (FOMC) meeting on April 29. Following his departure, Kevin Warsh will take over tentatively on May 15. The crypto market looks on to see whether Powell will unveil any last-minute moves that could influence it. In any case, time will tell how much salt Cowen’s thesis holds.
Temitope Olajide
