The prospect of a “Trump takeover of the Fed” is quickly becoming a central macroeconomic theme for 2026, with some traders saying markets are still underestimating how drastic the change could be for global liquidity – and by extension crypto.
Macro commentator plur daddy (@plur_daddy) describes it bluntly via
Former Fed trader Joseph Wang, known as “Fed Guy,” echoes the concern from within, warning: “The market is underestimating the likelihood of a Trump Fed. The administration is showing ingenuity and determination to cut rates. This could trigger a major blow to stocks, where implied volumes show there is still room for speculation.”
Trump’s takeover of the Fed is not taken into account
This determination comes up against a bond market which seems to be declining via the term premium. Plur highlights the spread between 12-month Treasuries and 10-year Treasuries as a clear measure of this tension. He notes that the spread “peaked just before the inauguration on the generic ‘Trump is going to be hot’ view, then “was crushed as DOGE and tariffs were priced in.” It bottomed near the lowest tariffs and “is now back to the highs,” a trend he interprets as an expansion of futures premiums as “a form of protest against (Kevin) Hassett,” Trump’s presumptive Fed pick.
In this context, the administration still has powerful tools to compress term premiums without formally announcing quantitative easing. Plur identifies three levers. First, deregulate banks so that they are allowed – in practice under pressure – to hold more Treasury bills, thereby stimulating structural demand for government securities.
Second, reduce the Treasury’s weighted average maturity by shifting issuance “towards longer-term bonds,” which reduces the duration the market must absorb. Third, specifically for mortgages, “raise GSEs to buy MBS,” reducing mortgage spreads and transmitting looser policy to the housing market even if the policy rate moves more slowly. He says “this is all pretty optimistic about the overall risk, but it will take time to play out.”
For now, the environment remains tricky for directional risk bets, including cryptocurrencies. “In the meantime, the market has been choppy and challenging, across the board. Stock indices have been climbing but the underlying rotations have been difficult to manage. The quarter has ended but liquidity is still relatively thin, and the fact that we are nearing the end of the year doesn’t help. Better times will come.”
The bullish pivot in its framework arrives with the calendar. “In the new year, fiscal easing will expand again with the implementation of OBBBA (+$10-15 billion/month). Meanwhile, we have macro teams on the sell side calling for $20-45 billion/month of Treasury purchases by the Fed, starting January 1.”
This combination would directly alleviate visible pressures in funding markets: “This would go a long way to easing current liquidity issues (see SOFR-IORB spread chart below). This is not classic QE in that very little duration is absorbed by the private sector, and primarily has the effect of increasing bank reserves. This remains bullish because bank reserves are tight at the time, which is linked to repo liquidity issues.”
Will the crypto market rise further?
On this basis, Plur expects the macroeconomic context in 2026 to be “better than that of the second half of 2025, perhaps more comparable to parts of 2024”. His phrasing of the trade is clear: “This should be enough for a strong performance in gold given the Fed’s takeover angle and the continued meltdown in stocks and some commodities.” »
However, for Bitcoin and the broader crypto market, its stance is significantly more cautious. “For BTC, it’s harder to say. My base case scenario continues to be a frustrating period of cutting and re-accumulating.” Improving liquidity “should be supportive for BTC,” but he questions whether there will be “a material change in the supply/demand imbalances that we have seen,” concluding: “I will continue to monitor this for the time being.”
In other words, Trump and the Fed’s trades are already driving highly convex bets on gold, stocks and commodities. Crypto should indirectly benefit from easier reserves and a lower term premium, but in this framework the main constraint is no longer just macro-liquidity: it is whether new demand is strong enough to meet an increasingly inelastic supply in the crypto market.
At press time, the total crypto market capitalization stood at $3.05 trillion.
