Markets jump as traders celebrate Trump’s crypto-friendly Fed pick and new catalysts

Crypto markets are ripping higher as traders latch onto a rare alignment of monetary and institutional tailwinds.

A pro-crypto economist is now the clear favorite to run the Federal Reserve, while some of the world’s biggest asset managers are finally telling clients that Bitcoin belongs in traditional portfolios.

Trump signals Kevin Hassett for Fed chair

Prediction markets and Wall Street desks increasingly expect Kevin Hassett, a long-time Trump economic adviser, to succeed Jerome Powell as the next Fed chair. 

In an Oval Office appearance on Dec. 2, President Donald Trump teased the choice in front of cameras: 

“I guess a potential Fed Chair is here too… I don’t know, are we allowed to say that? ‘Potential.’ He’s a respected person, that I can tell you. Thank you, Kevin.”

Related: Analyst warns removing Fed Chair would be 'nuclear event' for markets

Hassett currently leads the National Economic Council and, like Trump, has pushed for lower interest rates this year. He has been the front-runner on Treasury Secretary Scott Bessent’s shortlist for months. 

Crucially for crypto, Hassett once served at the Asset Management Academic and Regulatory Advisory Council at Coinbase (Nasdaq: COIN), the largest crypto exchange in the U.S. It raised the prospect that the world’s most powerful monetary policymaker could also be one of its most openly crypto-friendly.

In fact, Hassett has revealed holding a stake worth at least $1 million in Coinbase due to his advisory role at the crypto exchange.

With Polymarket giving Kevin Hassett an 82% shot at the Fed chair, traders are already pricing in a friendlier, more dovish 2026 playbook. 

Vanguard U-turn and ETF demand reinforce the move

In another major break with the past, Vanguard Group has reversed its long-standing stance and will now allow ETFs and mutual funds that “primarily hold cryptocurrencies” - including Bitcoin, Ether, XRP and Solana products - to trade on its brokerage platform.

“Vanguard Group, the world’s second-largest asset manager, has decided to allow ETFs and mutual funds that primarily hold cryptocurrencies to be traded on its platform, reversing a longstanding position,” Bloomberg reported, noting the change comes despite a more than $1 trillion drawdown in crypto market value since early October.

According to daily flow data from Farside Investors, the 48 hours following Vanguard’s Dec. 2 approval saw a sharp turn in demand.

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BlackRock’s IBIT pulled in $120 million on Dec. 2 after several days of outflows. 

Bank of America says up to 4% crypto ‘could be appropriate’ 

At the same time, Bank of America has moved from a cautious stance on digital assets to one of explicit endorsement. In a recent note, the bank’s CIO team told wealth management clients that a 1%-4% allocation to digital assets “could be appropriate,” depending on risk tolerance.

“For investors with a strong interest in thematic innovation and comfort with elevated volatility, a modest allocation of 1% to 4% in digital assets could be appropriate,” said Chris Hyzy, chief investment officer at Bank of America Private Bank.

The shift effectively retires “zero crypto” as the default stance for one of the largest US banks, and aligns Bank of America with peers like JPMorgan, Citi and Morgan Stanley that have spent much of 2025 building crypto ETF, custody and structured-product businesses.

Related: Bank of America recommends adding up to 4% of ‘gold rival’

Bitcoin and crypto markets roar back

Bitcoin has staged a sharp rebound from this week’s lows, trading around $93,200 at press time, up nearly 2% on the day and more than 5% over the past week. 

The total crypto market cap has climbed back to about $3.25 trillion, with BTC dominance near 58% and Ethereum at roughly 11.96%. XRP rose 0.85% to trade at $2.18.

The day’s move reflects how quickly sentiment can turn when multiple tailwinds align. A likely pro-crypto Fed chair, a Big Four bank telling clients that digital assets now belong in standard portfolios, and one of the world’s most conservative asset managers finally opening its doors to crypto ETFs.