The Swing of the Hand of God: How the Federal Reserve Chair Race Triggered a Flash Crash in the Crypto Market on Monday

Every sharp fluctuation in the financial markets can be traced back to the invisible “God’s hand”—the power struggle within the Federal Reserve decision-making body. Recently, a new round of Monday-style crashes has unfolded in the crypto market, seemingly driven by the rapid decline in coin prices, but fundamentally rooted in the market confidence collapse caused by a power vacuum at the core of the global financial system. When BTC drops from a high of $97,000 to below $92,000, ETH falls below $3,200, and SOL quickly dips below $140, market participants realize: the true spark for this decline may be far more than just the price itself.

According to Coinglass data, during this crash, the market experienced liquidations totaling $593 million within just a few hours, with long positions accounting for $566 million, and 238,400 traders being forced out during this volatility. Behind these figures lies a deeper issue: the market’s overreaction to macro policy changes, which is gradually eroding the stability foundation of crypto assets.

The “God’s Hand” Power Transition at the Federal Reserve: How Trump’s Fluctuations Freeze Market Expectations

As the decision-making hub of the US economy, the Federal Reserve wields unique monetary privileges and a detached status, playing the role of the “God’s hand” in the global financial system—every interest rate decision and every chairperson appointment can directly influence crypto market nerves.

Current Chair Powell’s term ends on May 15, and the selection of the new chair has entered a critical phase. Earlier, White House economic advisor Kevin Hasset was widely favored due to his dovish stance supporting rate cuts and his pro-Trump leanings. However, recent developments suggest this once-popular candidate may be gradually sidelined.

In recent communications with Hasset, Trump subtly expressed: “Honestly, I actually hope you can stay in your current position.” This statement effectively signaled the end of Hasset’s dream of becoming Fed Chair. Conversely, the market’s prediction platforms show rising confidence in former Fed Governor Kevin Wirth—Kalshi traders have increased Wirth’s probability of being chosen to 60%, while Hasset and Christopher Waller are at only 16% and 14%, respectively. Data from Polymarket also reflect a similar consensus: Wirth support at 60%, Hasset at 15%, and Waller at 13%.

Notably, US Treasury Secretary Janet Yellen recently stated that Trump is committed to protecting the Fed’s independence, and all four candidates are outstanding. However, Trump has yet to provide a clear timetable, and this indecisiveness has directly led to market confusion about the Fed’s policy direction. In the face of uncertainty, risk-averse investors tend to flee—this panic-driven market crash in crypto is a true reflection of such fear expectations.

Trump’s Power Play: Tariff Wars and Geopolitical Risks Deal a Heavy Blow to Market Sentiment

Beyond the change in Fed leadership, Trump’s series of “unpredictable” macroeconomic moves have further intensified market volatility.

The Greenland Dispute Escalates into a Trade War

From last May’s bold declaration of “considering forceful seizure of Greenland” to the White House press secretary reaffirming “all options are on the table” earlier this year, Trump’s obsession with Greenland has evolved from mere geopolitical ambition into genuine economic extortion. Initial plans even included offering 10,000 to 100,000 USD in “compensation” to Greenland’s 57,000 residents to persuade them to “join” the US, breaking away from Denmark. But ultimately, this “island war” transformed into an unprecedented tariff trade war.

On January 18, Trump announced a shocking tariff plan: starting February 1, the US would impose a 10% tariff on all goods imported from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, with plans to raise the rate to 25% by June 1. These tariffs would remain in effect until the US “completely purchases Greenland” through an agreement—an outright provocation to the EU. Following this news, several EU countries considered retaliatory tariffs on €93 billion worth of US exports.

EU Retaliation: Fines on Tech Companies Become New Trade Weapons

On January 15, Trump criticized the EU for hefty fines imposed on US tech giants. Data shows that in 2024, the EU fined US tech companies a total of €3.8 billion, while the total income tax of all European-listed internet companies in the same period was only €3.2 billion. This “inequitable” regulatory pressure is viewed by Trump as an infringement on US economic sovereignty.

Amid this “trade cold war,” global economic uncertainty has sharply increased. As a risk-sensitive asset class, the crypto market has borne the brunt—market participants are in unprecedented difficulty trying to predict Trump’s next move.

Out of Control “God’s Hand”: Crypto-Friendly Bill CLARITY Faces Consensus Crisis

Alongside macro policy shifts, regulatory uncertainty within the crypto industry is intensifying. The long-anticipated CLARITY Act (the US Senate’s Crypto Market Structure Bill) faces unprecedented twists.

Galaxy Digital research chief Alex Thorn pointed out that the US Senate Banking Committee’s scheduled hearing was suddenly postponed, reflecting deep disagreements between Congress and the industry on several key issues. The disputes focus on stablecoin yield mechanisms, DeFi regulation clauses, and the definition of tokenized securities.

More dramatically, Coinbase CEO Brian Armstrong withdrew support just hours after the bill was made public—publicly opposing provisions related to tokenized securities, DeFi restrictions, and stablecoin yields. Senate Banking Committee Chairman Tim Scott then announced the postponement of the hearing but did not specify a new date. With the Senate in recess next week, the earliest resumption could be between January 26 and 30.

This delay was announced in a highly dramatic manner: the bill draft was suddenly released late at night, over 100 amendments were submitted within 48 hours, and stakeholders kept discovering new contentious points at the last minute. This chaotic coordination process directly triggered market panic—after the delay was announced, crypto assets generally declined, with BTC and ETH falling about 2% that day, and related US stocks also under pressure, with Coinbase down 6.5%, Robinhood down 7.8%, and Circle down 9.7%.

Thorn summarized aptly: “The surface differences are small, but the deep divide is significant.” Although the market structure itself has largely reached consensus, issues around stablecoin yields, DeFi compliance, and SEC regulatory authority have created an insurmountable political chasm.

Market Correction or Long-term Adjustment? Traders’ Defensive Postures Reveal Clues

In the face of these compounded uncertainties, market participants are adopting defensive strategies. Trader Eugene recently stated that, due to underperformance of related investments, he has taken profits in stages and largely exited altcoin longs. While he still holds a core long position in BTC, he has significantly increased cash holdings, waiting for the next trading opportunity.

This “attack when possible, defend when necessary” approach reflects the current market sentiment: after BTC rebounded from the $85,000–$90,000 range to above $97,000, considering macro rate cut expectations’ uncertainty, geopolitical complexities, and the Fed’s policy ambiguity, taking profits might be the most prudent choice.

As of the latest data (January 30, 2026), BTC is at $83.89K, down 0.22% in 24 hours; ETH at $2.68K, down 4.24%; SOL at $116.91, down 0.03%. Compared to the previous high, the market has undergone a clear correction.

Conclusion: The Uncertainty of the “God’s Hand” Will Continue to Plague the Market

Whether this crypto market adjustment is a short-term technical correction or the beginning of a long-term bear market remains uncertain. But one thing is clear: the overlapping factors of Fed leadership transition, Trump’s unconventional decisions, and regulatory uncertainties in the crypto industry are creating a powerful market pressure.

When the Fed’s “God’s hand” falls into a power vacuum, when the global trade landscape faces reshaping, and when the prospects for crypto-friendly policies become blurred, market panic becomes a rational response. Whether the previous bull market trajectory can be restored may still depend on the predictability of Trump’s decisions—and that is precisely the most lacking certainty among current market participants.