The potential impact of a "Trump Fed takeover" on the crypto market is a hot topic for 2026. Traders are divided, with some believing that the market is underestimating the radical changes this could bring, especially for global liquidity and, consequently, the crypto space.
Macro commentator plur daddy (@plur_daddy) boldly states, "The Trump Fed takeover is my main focus for 2026, and I believe it's underpriced. This is a significant shift, and markets often struggle to accurately price in such large, complex catalysts."
Former Fed trader Joseph Wang, known as "Fed Guy," adds an insider's perspective, warning, "The market is underestimating the likelihood of a Trump Fed. The Administration is determined to lower rates, which could lead to a significant rise in equities, as implied volatility suggests there's still room for speculation."
The Trump Fed Takeover: Underestimated or Overhyped?
The tension between the Administration's determination and the bond market's resistance is evident. Plur daddy highlights the spread between the 12-month T-bill and the 10-year Treasury as a key indicator. He explains how this spread peaked just before the inauguration, reflecting the market's initial expectations of a "hot" Trump presidency, and then decreased as DOGE and tariffs were priced in. Now, the spread is back at its highs, which Plur interprets as a term-premium expansion, a form of protest against Kevin Hassett, Trump's presumed Fed pick.
Despite this, the Administration has tools to influence the term premium without formally announcing quantitative easing. Plur identifies three strategies: deregulating banks to increase their Treasury holdings, reducing the Treasury's weighted-average maturity by shifting issuance, and leveraging GSEs to buy MBS specifically for mortgages. These measures, he argues, are bullish for risk overall but will take time to materialize.
A Choppy Market and the Crypto Conundrum
Currently, the market remains challenging for directional risk bets, including crypto. Plur describes it as "choppy and difficult," with equity indices rising but rotations being tricky to navigate. While QT has ended, liquidity remains relatively thin, and the year-end adds to the complexity. However, Plur remains optimistic, stating, "Better times are ahead."
The Bullish Pivot and Crypto's Future
Plur's bullish outlook is tied to the calendar. He expects fiscal accommodation to expand with the implementation of OBBBA, adding $10-15 billion per month. Additionally, sell-side macro teams predict the Fed will repurchase T-bills at a rate of $20-45 billion per month, starting as early as January 1st. This mix, Plur argues, will directly address funding market pressures, easing liquidity issues. While it's not classic QE, it will expand bank reserves, which are currently tight, tied to repo liquidity problems.
Will Crypto Soar Again?
Based on these factors, Plur anticipates a more favorable macro backdrop in 2026, similar to parts of 2024. He believes this should drive strong performance in gold, given the Fed takeover angle, and continued growth in equities and select commodities. However, his stance on Bitcoin and crypto is more cautious. While improved liquidity should benefit BTC, Plur questions whether it will address the supply-demand imbalances seen in the market. He concludes, "I'll continue to watch and assess."
In summary, the Trump Fed trade is already influencing high-convexity bets in gold, equities, and commodities. Crypto may indirectly benefit from easier reserves and lower term premiums, but the key question remains: Will fresh demand be strong enough to meet the increasingly inelastic supply in the crypto market?
At the time of writing, the total crypto market cap stood at $3.05 trillion.
