Prediction Markets: Hassett Far Ahead

In recent days, there has been significant activity on global prediction platforms Polymarket and Kalshi. According to the data:

• Hassett: 76%
• Kevin Warsh: 14%
• Christopher Waller: 10%

Hassett’s rise is especially notable. Hassett, who served as Director of the National Economic Council during the Trump administration, has long been considered a favorite. The main reason he is viewed as “crypto-friendly” in the crypto world is his role on Coinbase’s advisory council and the fact that he is known to hold a substantial stake in the exchange.

The assessment from Caitlin Long, CEO of Wyoming-based Custodia Bank, resonated within the crypto community:
“If Hassett really becomes Fed Chair, the influence of anti-crypto figures within the institution will be significantly reduced. We would see major changes at the Fed.”

A New Era in Crypto Policy?

Hassett’s rise brings back the possibility of a softening in the Fed’s approach to crypto assets. However, past examples show the importance of managing expectations. As remembered, Gary Gensler raised optimism when he arrived at the SEC with blockchain expertise, yet he maintained strict regulatory policies throughout his tenure.

If Hassett is chosen, there is no definitive picture that the Fed will fully open the door to crypto. However, compared to the current Fed structure, a more “experimental” stance and a more open approach to bank-crypto integration appear more likely.

Supervision Debates Continue Inside the Fed

While the new chair discussions continue, significant disagreements regarding supervisory and oversight mechanisms are emerging within the Fed. The institution’s recently announced “risk-focused supervision” approach has been viewed as too lenient by some internal figures. For this reason, it is clear that the new chair will take over a Fed already in the midst of a shift.

When Will the Announcement Come?

U.S. Treasury Secretary Scott Bessent recently stated, “It is highly likely that Trump will announce the new Fed Chair before Christmas,” increasing expectations even further.

All eyes are now on Washington. Hassett’s rising probability is being followed with great interest, especially by crypto investors and industry participants. In the coming weeks, we may witness critical developments that will directly shape the future of U.S. monetary policy and its relationship with crypto.

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A Clear Signal for the Next Meeting to Rate Cuts

Reiterating his earlier stance, Waller stated that the Fed should move ahead with a rate cut at its upcoming policy meeting. He also suggested that multiple rate reductions could follow in the months ahead, depending on economic data.

Flexibility in the Pace of Cuts

Waller emphasized that the Fed does not need to stick to a rigid pace when adjusting interest rates. “We can always recalibrate the speed of cuts,” he explained. This underscores the central bank’s data-driven approach, allowing it to adapt policy in response to evolving conditions.

Concerns Over the Labor Market

Another key point raised by Waller was the recent softening in the labor market. He stressed that the Fed must act to prevent further deterioration, highlighting the central bank’s dual mandate of maintaining price stability while supporting employment.

Inflation Outlook for Rate Cuts

While acknowledging that inflation could see slight upward moves in the short term, Waller dismissed concerns of a lasting rebound. He expects inflation to move closer to the Fed’s 2% target over the next six months, reinforcing confidence in the current policy path.

Growth Expectations: Slowdown, Not Recession

Waller ruled out the likelihood of a recession but noted that U.S. economic growth is likely to decelerate. He also argued that while tariffs may weigh on growth this year, they are unlikely to create long-term inflationary pressures.

Addressing Fed Chair Speculation

Finally, Waller clarified that he has had no discussions regarding the possibility of becoming Fed Chair, putting an end to speculation surrounding his potential candidacy.

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11 Strong Contenders on the Table for Fed List

Treasury Secretary Scott Bessent told Fox News on Wednesday that there are “11 very strong candidates” under consideration for the Fed chair position, and that the vetting and shortlisting process will begin next month.

According to a CNBC report dated August 13, the list includes Dallas Fed President Lorie Logan, former St. Louis Fed President James Bullard, Fed Vice Chair Philip Jefferson, Fed Governor Chris Waller, Fed Vice Supervision Chair Michelle Bowman, and former Fed Governor Larry Lindsey.

Other notable names include former Bush administration economic adviser Marc Sumerlin, Jefferies chief market strategist David Zervos, and BlackRock’s Global Fixed Income CIO Rick Rieder.

Interest Rates and Crypto Market Impact

The Federal Reserve’s monetary policy plays a pivotal role in shaping global market sentiment. Lower interest rates typically boost liquidity and drive investors toward riskier assets — including Bitcoin and altcoins. In contrast, higher rates usually lead to capital outflows from volatile assets like crypto.

BlackRock’s Rieder: “Bitcoin Is Here to Stay”

Among the candidates, Rick Rieder stands out for his consistent pro-crypto stance.

In early 2024, he told the Wall Street Journal that Bitcoin could “become a big part of the asset allocation framework” and that people will gradually become more comfortable with it over time.

Back in 2020, Rieder told CNBC that Bitcoin and cryptocurrencies are “here to stay,” emphasizing that younger generations’ openness to digital assets and technology is undeniable. Today, BlackRock manages the largest Bitcoin and Ethereum ETFs in the market.

Waller and Bowman Signal Openness to Crypto

Two other candidates, Chris Waller and Michelle Bowman, have also shown crypto-friendly attitudes.

On August 20, Bowman suggested that Fed staff should be allowed to invest small amounts in crypto, arguing it would provide them with a better working knowledge of the underlying technology.

A day later, Waller noted that the banking sector had “nothing to fear” from crypto payments operating outside the traditional system, framing it as simply “a new technology for transferring and recording transactions.”

FED Powell’s More Cautious Approach

Outgoing Chair Jerome Powell has addressed crypto several times but with more caution. In June, he stated that cryptocurrencies had become more mainstream and that banks were expected to increase their engagement with the sector.

However, in December, he clarified that he viewed Bitcoin more as a competitor to gold rather than the U.S. dollar.

Jefferies’ Growing Crypto Ties

Another candidate, David Zervos of Jefferies, comes from a firm that has been heavily involved in crypto-related ventures. Jefferies has supported the IPOs of eToro, Circle, Bullish, and Figure, while also backing Michael Saylor’s Bitcoin acquisition strategy at an early stage.

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Trump’s Advisers Turn to Waller for Fed Chair

Sources close to President Trump say that Fed Governor Christopher Waller is emerging as a strong candidate to succeed Jerome Powell. What stands out for Trump’s team is Waller’s willingness to base his monetary policy decisions not only on current data but also on forward-looking forecasts. This approach is especially appealing in a time when rate cuts are back on the table.

Pro-Crypto Attitude Sets Him Apart

Waller has not only earned recognition in traditional economic circles but also among the crypto community. His previous supportive remarks about digital assets have drawn attention within the space.

During the latest FOMC meeting, Waller voted in favor of a rate cut—positioning himself as a more dovish voice at the Fed. That move aligns closely with what Trump’s economic team may be seeking in a potential chair.

No Direct Meeting With Trump—Yet

While Waller has reportedly met with members of Trump’s advisory team regarding the position, he has not yet had a one-on-one meeting with the President himself. Still, his name remains high on the shortlist.

Deep FED Knowledge Adds Value

What makes Waller even more appealing is his extensive expertise in the workings of the Federal Reserve system. With years of experience in central banking, he is seen as a technically strong and strategically aligned choice for the role.

Click here to also review other potential candidates.

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