President Donald Trump’s nomination of Kevin Warsh for Federal Reserve Chair is creating what analysts call a “mixed signal” for Bitcoin and U.S. liquidity. Market reaction shows cryptocurrency prices, including Bitcoin, falling toward multi-month lows as traders reassess expectations. The mixed signal stems from Warsh’s expected continuation of interest rate cuts but perceived skepticism toward balance sheet expansion, a key driver for risk assets.
The nomination of Kevin Warsh by President Donald Trump to lead the Federal Reserve is being viewed by market analysts as a “mixed signal” for Bitcoin and U.S. liquidity conditions. This is currently affecting crypto markets and prices.
Analysts state that while Warsh is likely to sustain the Federal Reserve’s interest rate cutting path, his approach toward monetary policy instruments like balance sheet expansion is questionable. “An investor could view the Warsh nomination as supporting the path to lower rates but with liquidity levels stabilizing rather than increasing significantly,” according to Thomas Perfumo, the global economist at Kraken.
Warsh’s doubts about large-scale balance sheet expansion have spooked some traders because quantitative easing generally boosts liquidity. If the Fed under Warsh does not rely on balance sheet expansion, it could be seen as a move to tighten financial conditions more than expected.
Since the nomination announcement, the cryptocurrency market has seen increased volatility with Bitcoin dipping below key levels. Bitcoin has hit lows not seen since late 2025 amidst growing liquidity and macro risk sentiment concerns.
Even traditional safe-haven assets like gold are facing pressure while the dollar appreciates. These factors present a challenge to risk-based assets, highlighting how liquidity expectations are at the heart of cross-asset markets.
