Bitcoin Slips 4.5% as Traders Take Profits and Trump Intensifies Calls to Oust Fed Chair Powell

Bitcoin’s rally hit a speed bump on Tuesday, dipping 4.5% from its Monday all-time high and trading at around $117,250, according to CoinGecko data. The pullback reflects a wave of profit-taking and heightened market anxiety fueled by mixed economic signals and growing political tensions around the future of Federal Reserve Chair Jerome Powell.

Exchange Inflows Suggest Traders Are Taking Profits

A notable spike in Bitcoin exchange inflows on Tuesday—14,000 BTC, according to CryptoQuant’s head of research Julio Moreno—suggests that many traders moved to lock in gains following Bitcoin’s price surge. “Bitcoin exchange inflows spiked as prices hit the most recent all-time high yesterday,” Moreno posted on X. “Higher exchange inflows typically precede price volatility.”

On-chain data further supports the profit-taking narrative. Analytics platform Santiment reported that short-term Bitcoin holders are sitting on an average profit of 10%. This range falls within what Santiment defines as the “danger zone”—historically a point where holders begin to offload tokens to avoid risk, often triggering broader market corrections. In late May, Bitcoin dropped more than 8% after the 30-day Market Value to Realized Value (MVRV) ratio surged repeatedly past 10%.

Sticky Inflation Complicates the Outlook

The release of June’s Consumer Price Index added to market uncertainty. Inflation rose to 2.7%—up from 2.4% in the same month last year—meeting analyst expectations but reducing the odds of near-term interest rate cuts by the Federal Reserve. Sticky inflation typically leads to prolonged high borrowing costs, which weigh heavily on risk-on assets like cryptocurrencies and tech stocks.

Moreno, however, doesn’t believe the recent correction marks the end of Bitcoin’s upward trend. “I don’t think that was the top,” he told Decrypt. He suggested that a more dovish Fed chair—one more inclined to lower rates—would be “positive” for crypto.

Trump Pressures Powell as Fed Politics Intensify

Adding to the uncertainty is the growing political storm surrounding Fed Chair Jerome Powell. U.S. President Donald Trump and his administration have intensified calls for Powell’s removal, arguing that the central bank chief has failed to act decisively on interest rates. Trump has openly demanded lower rates and has made no secret of his frustration with Powell.

On Tuesday, Trump hinted that a major cost overrun in the Federal Reserve’s renovation project—reported to cost $2.5 billion—could be grounds for firing Powell. When asked whether this was a fireable offense, Trump responded, “I think it sort of is.”

The campaign against Powell has extended beyond the White House. Republican Rep. Anna Paulina Luna claimed Powell’s firing was imminent, while U.S. Director of Federal Housing William Pulte stated that Powell is “considering resigning,” citing a “very credible, bipartisan source.” Senator Cynthia Lummis also weighed in, stating publicly that Powell should step down.

White House economic advisor Kevin Hassett suggested that the Fed renovation probe could give Trump the authority to terminate Powell. A Bloomberg report on Tuesday named Hassett as one of the top candidates to replace the Fed chair. Trump himself also mentioned Treasury Secretary Scott Bessent as a leading contender, although he added that he liked Bessent’s current performance in his role.

With Powell’s term not set to expire until May 2026, the intensifying calls for his resignation—and the broader political instability surrounding the Fed—are adding new layers of volatility to the crypto markets. As Trump continues to advocate for lower rates and a more crypto-friendly regulatory landscape, the future leadership at the Federal Reserve could play a pivotal role in shaping Bitcoin’s next move.