Trump Nominates Kevin Warsh: Mixed Signals for Bitcoin, Liquidity
U.S. President Donald Trump has nominated former Federal Reserve Governor Kevin Warsh to serve as chair of the U.S. central bank, a development that analysts say sends mixed signals for cryptocurrency markets and U.S. dollar liquidity.
Warsh, viewed by some as Bitcoin-friendly, was nominated on Friday and would succeed Jerome Powell when his term ends in May, pending Senate confirmation.
Market participants expect the Fed to maintain its rate-cut trajectory under Warsh, but Thomas Perfumo, a global economist at cryptocurrency exchange Kraken, said the appointment suggests overall market liquidity is likely to stabilize rather than expand meaningfully. He noted that this backdrop remains mixed for Bitcoin and the broader crypto sector, which tend to be more sensitive to liquidity conditions than to incremental changes in the federal funds rate.
The comments follow a weekend downturn in digital assets, with cryptocurrency market capitalization declining by $250 billion amid a broader sell-off that also affected equities and precious metals.
Market slide linked to Warsh nomination and liquidity risks: Puckrin
Nic Puckrin, investment analyst and co-founder of educational platform Coin Bureau, said Warsh’s nomination heightened investor concerns about liquidity and was a key driver of the sell-off across cryptocurrencies, equities, and precious metals. He noted that markets are parsing Warsh’s views on the Fed’s balance sheet, which he has described as “trillions larger” than necessary. Puckrin added that if policies are implemented to shrink the balance sheet, markets would face a lower-liquidity environment that typically weighs on risk assets and precious metals.
Puckrin also said there is uncertainty about Warsh’s interest rate stance and the extent to which he may align with Trump’s preference for lower rates.
Rate expectations have been largely unchanged since the nomination, with 85% of market participants anticipating no change at the next meeting on March 18, according to CME Group’s FedWatch tool.
Expectations are also stable for the June 17 meeting, with 49% projecting a 25 basis-point cut, up from 46% the previous week. That meeting would be the first Federal Open Market Committee gathering after Powell’s term concludes in May.
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