Benjamin Cowen sees a risk that a more politically aligned Federal Reserve could weaken confidence even if markets get lower rates.
Widely followed analyst Benjamin Cowen said in an X post Thursday that crypto’s slide since early 2025 tracks a deeper loss of trust that began after Gary Gensler left the SEC, with Bitcoin falling from $109,000 then to about $75,000 now.
His warning goes beyond crypto: he says cheering Jerome Powell’s exit from the Federal Reserve could create the same kind of credibility problem in traditional markets.
A Celebration That Became a Turning Point
Cowen’s argument is blunt: Gensler’s departure was widely cheered, but it essentially removed the threat of consequences for bad actors. What followed, in his view, was a period where influencers and politicians launched meme coins, rug-pulled their followers, and paid no price for it.
Capital that might have flowed into projects with actual utility got sucked into what he called “useless assets,” thinning out liquidity across the board. Bitcoin moved marginally higher after Gensler left, then turned lower, with the rally many expected never materializing in any meaningful way.
According to Cowen, there’s a similar pattern forming around Fed Chair Jerome Powell, following what is expected to be his last meeting as chair on Wednesday, where the Fed held its benchmark interest rate unchanged for the third straight time, leaving rates at 3.50%-3.75%, with four officials dissenting.
Trump appointee Kevin Warsh, already cleared by the Senate Banking Committee, is set to succeed Powell, and just as with Gensler, large parts of the market are treating the former’s exit as a bullish development, expecting the new chair to push through rate cuts more aggressively.
Cowen does not share that confidence:
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“If the Fed just becomes another cabinet of the executive branch,” he wrote, “it may lead to a lack of trust in the institution itself.”
His read is that the markets are better off with a Fed that feels independent than with one that feels compliant, even if the compliance delivers the rate cuts traders want in the near term.
What Happens After the Cheer Fades
Turkish crypto commentator Cihan0x.ETH extended Cowen’s logic further, noting that rate cuts are no longer expected any time soon, with the timeline shifting from 2026 expectations to 2027, driven primarily by energy-side inflation rather than demand.
The war in Iran has kept global energy prices elevated, which is showing up in US inflation data: the Fed’s own statement cited “the recent increase in global energy prices” as a contributing factor. That kind of inflation gives the Fed less room to act, not more, regardless of who chairs it.
The other dimension of Wednesday’s news is structural. Powell announced he plans to remain on the Fed’s board after his chairmanship ends next month, citing what he described as “unprecedented” legal pressure from the Trump administration as a reason he does not yet feel it is appropriate to leave.
His decision denies Trump a chance to fill an additional board seat and could create what some analysts are calling a “two Popes” dynamic, with a sitting chair and a former chair both on the same seven-member governing board.
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