Kevin Warsh's Fed Chair race,
Fear in the Bitcoin market, Bitcoin under pressure
Bearish pressure: The prospects of Kevin Warsh's nomination have pushed Bitcoin down to a low of $81,000.
Hawkish record: Warsh is known for his 'hawkish' stance and for advocating strict measures to control inflation.
The end of liquidity: The market fears that Warsh's arrival will end the era of easy money, which is detrimental to risky assets like crypto.
Strength of the dollar: His policies could make the U.S. dollar stronger, which generally works against the price of Bitcoin.
Who is Kevin Warsh and why is the market scared of him?
Kevin Warsh served as a governor of the Federal Reserve from 2006 to 2011. His theory on monetary policy has been very strict, where he has supported keeping interest rates high to curb inflation and withdrawing excess liquidity from the market.
The prices of cryptocurrencies like Bitcoin often rise when there is a lot of money circulating in the market. Warsh is considered a staunch opponent of this 'easy money'.
Markus Thielen, who is the founder of 10x Research, says that Kevin Warsh's influence is negative for Bitcoin. This is because he views crypto not as a shield against inflation but as a 'speculative excess'. When liquidity decreases in the market, the prices of such assets fall first.
A stir has erupted in the financial markets, especially in the cryptocurrency market, after U.S. President Donald Trump put forward Kevin Warsh as a favored candidate for the next head of the Federal Reserve. On Thursday night, the price of Bitcoin fell to nearly $81,000, largely due to increased chances of Warsh winning in the betting markets.
According to experts, Kevin Warsh's Fed Chair Bitcoin Impact is being viewed by the market as a negative or 'bearish' signal. This is because his past is tied to a strict monetary policy and financial discipline.
This situation is interesting also because President Trump has consistently supported low interest rates and vigorous economic activity. He has openly criticized Jerome Powell and has talked about bringing interest rates down to 1 percent, while Kevin Warsh's past tells a story that is completely opposite. This is why many experts are calling it a conflicting choice against Trump's policy thinking.