Trump's proposal to set a 10% interest rate cap on credit cards shocks the market. Will Bitcoin become TradFi's "Plan B"?

U.S. President Donald Trump recently made a sudden statement on social media, demanding that starting from January 20, 2026, the cap on credit card interest rates be set at 10% for one year, warning banks that non-compliance could lead to legal consequences.

This move triggered a massive shock in the financial markets, with credit card company stocks plummeting sharply, and strong opposition from the banking industry, which argued that this would severely restrict credit availability and harm the economy. Although the proposal lacks specific implementation pathways and faces significant legal and political resistance, the widespread discussion it sparked deeply reveals the fragility and politicization risks within the TradFi system. Against this backdrop, Bitcoin’s core principles of “decentralization,” “censorship resistance,” and “permissionless” are once again spotlighted. Currently, Bitcoin trades around $90,500, while the market is digesting the latest non-farm payroll data and its impact on the Federal Reserve’s rate policy, with overall sentiment turning cautious.

An “Impossible” Proposal Shaking Wall Street

A brief statement posted by Donald Trump on his social platform Truth Social ignited market tensions immediately after a calm weekend. He claimed that starting from January 20, 2026, a one-year cap of 10% on credit card interest rates would be implemented, warning major card issuers that failure to comply could result in legal action. Trump framed this move as “consumer protection,” accusing big banks of exploiting consumers with annualized rates approaching 30%, trapping American families in long-term debt. Such populist rhetoric hits a nerve in current American society, reflecting widespread dissatisfaction with high borrowing costs and living expenses.

However, upon closer examination, the feasibility of this proposal is highly questionable. Policy experts and analysts generally point out that Trump has not provided any concrete legal mechanisms or legislative support for enforcing such a cap. In the U.S. political system, setting a nationwide interest rate limit would almost certainly require legislation passed by Congress, not an executive order or social media statement. Morningstar analyst Michael Miller commented, “Trump’s statement is more of a call to action than a detailed policy or legislative announcement.” Therefore, after the initial shock, markets are likely to view this as a political posture and campaign strategy aimed at attracting voters burdened by debt.

Although the proposal itself may be “loud but ineffective,” the immediate market reactions are very real. On Monday’s open, stocks of major credit card lenders suffered heavy declines, with Capital One and Synchrony Financial dropping 6% and 8%, respectively. American Express and Citigroup fell about 4% and 3%. Wells Fargo analyst Mike Mayo expressed shock in a client report with just “Yikes,” estimating that such a cap could reduce large banks’ pre-tax profits by 5% to 18%, with profits for institutions like Capital One and Synchrony potentially wiped out. The sharp volatility in stock prices clearly reflects the market’s assessment and panic over the potential destructive power of this proposal.

Banks’ Anger and Data: A Game Over “Credit Access” Battle

The banking sector responded swiftly and fiercely to Trump’s proposal. Within hours of the announcement, five major banking trade groups, including the American Bankers Association and the Bank Policy Institute, issued statements warning of disastrous consequences. Their core argument: a one-size-fits-all government price control would ultimately harm the very families and small business owners it claims to protect. The Electronic Payments Association cited data indicating that if a 10% interest rate cap were implemented, nearly all credit card accounts with a credit score below 740 (about 82% to 88% of active accounts) would be closed or severely restricted.

The core logic of banks centers on risk-based pricing. They argue that the high interest rates on credit cards (currently averaging around 22.30% per year, up from 16.28% in 2020) are necessary compensation for unsecured, high-risk loans. Forcing rates down to 10% would make it impossible for banks to cover potential losses and operational costs associated with lending to subprime borrowers, inevitably leading to tighter credit standards and excluding higher-risk borrowers from formal credit channels. Moreover, to offset losses, banks might impose higher annual and monthly fees and significantly cut back on credit card rewards, ultimately increasing costs for “creditworthy” consumers.

Conversely, supporters of the rate cap present compelling data. A September study by Vanderbilt University’s Policy Accelerator Research Center showed that a 10% interest rate cap could save U.S. consumers $100 billion annually. Center director Brian Hiller noted that despite banks’ claims of thin margins, “we find that (credit card) profit margins are actually quite substantial, and there’s definitely some fat to cut.” The debate essentially pits “consumer protection” against “market efficiency and credit access.” Trump’s proposal acts like a bomb in deep waters, sparking societal discussions on usury laws, consumer rights, and the future of the U.S. credit market.

Cryptocurrency: An Unexpected “Beneficiary”? Narrative Reinforcement Over Immediate Gains

On the surface, Bitcoin and cryptocurrencies seem unrelated to the credit rate cap proposal. Bitcoin offers no credit, no consumer protections, and no cashback rewards. However, whenever trust in TradFi cracks or its rules become highly politicized, Bitcoin’s alternative narrative gains strength. Trump’s proposal highlights key pain points in TradFi: centralization, policy arbitrariness, and barriers to entry. For Bitcoin supporters, this underscores the value of a decentralized, censorship-resistant, permissionless financial system.

Specifically, if the rate cap is implemented and banks tighten credit, some consumers and merchants excluded from traditional finance might turn to alternatives. Stablecoins and decentralized finance (DeFi) peer-to-peer lending platforms could gain attention. While directly replacing credit cards with Bitcoin or Ethereum for daily borrowing isn’t practical (DeFi rates can be volatile and higher), in cross-border payments and non-bank transactions, crypto payment systems could become more attractive. The banking trade groups’ opposition statements also subtly acknowledge this risk, warning: “If implemented, this cap would only push consumers toward less regulated, potentially higher-cost alternatives.”

However, it’s crucial to recognize that crypto lending isn’t automatically cheaper or safer. Many DeFi platforms’ interest rates are driven by market demand and can be much higher than traditional credit card rates during boom periods. More importantly, if cryptocurrencies start to assume large-scale shadow banking functions, they will attract stricter global regulatory scrutiny and crackdowns. Therefore, expecting this proposal to directly trigger a crypto market surge in the short term is unrealistic. Its real impact lies in the narrative layer: adding new weight to the long-term argument of Bitcoin as a “hedge against systemic uncertainty.” If discussions on credit regulation intensify, they could subtly channel more funds and attention into crypto.

Bitcoin’s “Narrative” vs. Market Reality: Fluctuating in the Macro Gap

Currently, crypto market movements are driven not by a single event but by multiple macro factors. Alongside Trump’s interest rate cap proposal, markets are digesting the latest U.S. non-farm payroll data. December added 50,000 jobs, slightly below expectations, but the unemployment rate fell from 4.5% to 4.4%. This “slowing job growth but declining unemployment” signals complicate the Fed’s rate policy path. According to CME FedWatch, the market currently assigns only a 5% probability of a rate cut at the next meeting.

Strong labor market data diminish the urgency for rate cuts, exerting short-term pressure on risk assets like Bitcoin. Higher rates make risk-free assets like Treasuries more attractive, potentially diverting capital seeking yields. CryptoQuant CEO Ki Young Ju predicts Bitcoin may enter a sideways phase in early 2026 with limited growth, as some funds shift toward stocks and commodities. Despite narrative catalysts like Trump’s proposal, Bitcoin’s short-term price remains constrained by macroeconomic conditions and liquidity expectations, hovering around $90,500 with hesitation.

Looking ahead, key macro variables—inflation data, trade tariffs, and Fed policy—will determine market direction. Rising inflation could rekindle interest in crypto as an inflation hedge; overheating economy might prolong tightening, suppressing risk appetite. Trump’s rate cap proposal, even if unlikely to materialize, acts as a mirror reflecting the fragility of the TradFi system under political and economic pressures. Recognizing this fragility may be the most vital part of Bitcoin’s long-term value support.

Background: Key Data on U.S. Credit Card Debt

Total Outstanding Debt: Reached a record high, surpassing $1 trillion

Average APR: 22.30% (2024 data), highest since 2015

Average Private Label Card APR: up to 31.3%

Proportion of Cardholders Paying Only Minimum: Highest since 2015

Core Proposal: Mandate to limit the above interest rates to 10% for one year

Immediate Market Reaction: Credit card company stocks fell 3%-8%; BNPL company Affirm’s stock rose 4%

Market Strategy: How to Position Amid Uncertainty

In the face of policy noise from TradFi and complex macro signals, crypto investors should adopt cautious and structured strategies. First, avoid chasing or panicking over event-driven news. Messages like Trump’s proposal tend to have short-lived, emotional market impacts and shouldn’t form the basis of core investment decisions. Instead, focus on the underlying long-term trend—growing distrust in centralized finance—which supports Bitcoin’s narrative.

Second, stick to dollar-cost averaging and proper position management. Given potential sideways markets, deploying funds gradually around key support levels (e.g., technical and psychological levels for Bitcoin) rather than all-in at once is prudent. Diversify into Layer 1 blockchains and DeFi blue chips with solid fundamentals, less affected by macro volatility.

Finally, closely monitor Fed signals and upcoming U.S. election policies. The real trend depends on liquidity expectations. Be prepared for a risk-on environment if rate cuts are confirmed. Until then, patience, solid knowledge, and focusing on technically and fundamentally strong projects will position investors advantageously for the next cycle.