On the evening of January 21, the U.S. Supreme Court's stance became a decisive factor weighing on the crypto market. The Court reportedly leaned against President Trump's immediate removal of Federal Reserve Chair Jerome Cook, a development that directly dampened risk appetite. Powell's backing during the hearing further dimmed hopes for rate cuts — if Cook retains his position, judicial protection of the Fed's independence would solidify expectations of a maximum of two rate cuts by 2026.
White House Senior Advisor Kevin Hassett delivered key remarks around the same time. As a central figure in Trump's economic team, Hassett revealed that Trump is confronting data realities in Davos, with a major housing policy announcement imminent. He also projected further reduction of the budget deficit over the next year and hinted that U.S. GDP could exceed 5% growth for two consecutive quarters. Rather than boosting sentiment, this optimistic outlook was interpreted by markets as narrowing room for monetary easing, pressuring risk assets broadly.
Geopolitical Shockwaves: Greenland Dispute Widens US-EU Rift
Denmark has explicitly rejected Trump's request to negotiate the purchase of Greenland. Trump subsequently pledged not to overreach but called for urgent talks. The Greenland issue quickly escalated into sharp exchanges between the U.S. and the EU: Washington insists on including Greenland in its strategic orbit, while the EU retaliates by selling U.S. sovereign bonds.
Multiple major European pension funds have begun reducing their U.S. Treasury holdings, driven not by economic fundamentals but by frustration with Trump's negotiation tactics and unpredictability. This move comes as the mutual tariff plan enters its final countdown — reciprocal tariffs between the U.S. and EU are set to take effect on February 1. The sovereign bond sell-off pushed U.S. yields higher, further draining liquidity from the crypto market.
Strong Jobs Data and Regulatory Overhang Nix January Rate Cut Hopes
Robust U.S. employment data has effectively eliminated the possibility of a rate cut in January. Combined with the ongoing Supreme Court case over Powell's position, market bets on near-term monetary easing have been completely unwound. Powell's public support for Cook in court was seen as a strong defense of central bank independence, but it also deepened traders' pessimism about policy pivots.
The crypto market suffered a broad decline under the weight of these macro and geopolitical pressures. Bitcoin and major altcoins dropped more than 5% intraday, triggering widespread liquidation of leveraged longs. Institutional positioning data shows the clearest outflow signals from European funds, with some shifting allocations from risk assets to cash or short-dated Treasuries for hedging.
As of press time, the Supreme Court has not yet delivered a final ruling, but markets have already priced in Cook's retention. Should the ruling reverse, a second wave of volatility could follow. For now, the triad of Fed independence, US-EU confrontation, and strong employment data has overwhelmed the crypto market.