Bitcoin has declined by 14% over the past week amid uncertainty following former Federal Reserve Governor Kevin Warsh’s nomination as the next Fed Chair. While President Donald Trump’s endorsement of the nomination reinforces expectations for rate cuts, investors are concerned about Warsh’s contrasting plan to shrink the Fed’s balance sheet. Market analysis suggests the broader pullback in U.S. assets reflects investor caution over potential liquidity tightening rather than crypto-specific factors.
Bitcoin has fallen 14.3% in the week since former Federal Reserve Governor Kevin Warsh was nominated as the next Fed Chair. This decline coincides with a broader downturn in U.S. assets, indicating the movement is not driven by crypto-specific factors.
Market analysts note investors who had been betting on reflation have turned cautious. They are concerned that Warsh’s policies, while potentially supportive of rate cuts, could tighten market liquidity by shrinking the Fed’s balance sheet.
President Donald Trump’s selection of Warsh was seen as a move to install a Fed Chair more bullish on cutting interest rates. This contrasted with the policy stance of current Chair Jerome Powell.
Despite this, Bitcoin has not rallied. Historical data from the 2025 cycle showed Bitcoin ended the year down 6.3% even after the Fed cut rates three times, as tracked by market tools. The full impact of the nomination remains uncertain.
Persistent macroeconomic challenges are adding to the uncertainty. Stubborn inflation, higher-than-expected recent data releases, and Trump’s fluctuating stance on tariffs contribute to a complex backdrop.
Consequently, the market appears to be weighing multiple conflicting signals. For Bitcoin, the immediate price action suggests a more bearish sentiment is prevailing among investors as they assess the long-term implications.
