Bitcoin extended its decline and by the end of the week dropped to around $81,000. The market links the movement not so much to technical factors as to rising expectations surrounding the possible appointment of a new head of the U.S. Federal Reserve System.
President Donald Trump stated that he will soon announce the successor to the current Fed chair. Jerome Powell’s term ends in May, and the intrigue around the new regulator chief has already begun to affect financial markets.
Why Markets Are Nervous
According to analysts and betting platforms, one of the favorites is former Fed Board member Kevin Warsh. It is the rise in his odds that triggered the sell-off of risky assets, including cryptocurrencies.
Although Warsh has at times spoken neutrally or even moderately positively about digital assets, investors remember well his reputation as a staunch advocate of monetary discipline. For bitcoin, this is a risk signal: the market fears that if he is appointed, the Fed may keep real interest rates high and financial conditions tight for longer.
Hawkish Stance and Crisis Experience
During the global financial crisis of 2008–2009, Warsh repeatedly emphasized inflationary risks even when the U.S. economy was teetering on the brink of deflation. At that time, he advocated caution in stimulus measures, fearing the long-term consequences of loose policy.
This approach is causing concern among crypto investors now as well. High real rates mean more expensive borrowing and less interest in high-risk assets. In such an environment, bitcoin ceases to be seen as a hedge against currency devaluation and is increasingly viewed as a speculative instrument.
Expectation Conflict With Trump’s Rhetoric
The situation looks paradoxical. Donald Trump regularly criticizes the Fed’s current monetary policy and calls for sharper rate cuts, saying the current level is too high for the economy. His public rhetoric is aimed at stimulating growth and supporting markets.
Against this backdrop, a candidate with a “hawk” reputation appears contradictory. Some analysts believe Warsh’s hawkish stance may conflict with White House expectations and create additional uncertainty for markets.
Why Bitcoin Reacts First
Cryptocurrencies traditionally react sharply to signals from the Fed. A rising dollar and expectations of policy tightening almost always put pressure on bitcoin. That is why the increased betting on Warsh as the future head of the regulator coincided with a new round of BTC decline.
At the same time, it is important to understand: even if appointed, the new Fed chair does not make decisions alone. Policy is determined by committee, and the influence of one person is limited. However, markets react not to formal powers but to expectations and signals.
What’s Next?
Until the official announcement of the candidate, uncertainty will remain. If a proponent of tight monetary policy remains the favorite, pressure on risky assets may continue. For bitcoin, this means increased volatility and investor caution in the coming weeks.
The market is waiting for clarity. And the longer the intrigue around the Fed’s future persists, the more likely it is that cryptocurrencies will remain under pressure, regardless of their own fundamental factors.
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