Bitcoin, Ether, and XRP plunged over the weekend as U.S. President Trump’s Fed chair nominee Kevin Warsh sparked market fears with his hawkish stance on monetary policy.
Market reactions reflect concerns over tighter liquidity, leading to significant crypto sell-offs and leveraged liquidations, mirroring past events such as the FTX collapse in November 2022.
Bitcoin Hits 10-Month Low
Bitcoin has fallen to a 10-month low between $74,500 and $77,000 due to Kevin Warsh’s nomination as Federal Reserve chair. This event impacted several cryptocurrencies, including Ether and XRP, amid concerns over policy tightening.
Kevin Warsh, nominated by President Trump, has a reputation for advocating stricter monetary policies. Markets view his potential leadership as reducing liquidity, negatively impacting high-risk assets such as cryptocurrencies.
$111 Billion Shed from Crypto Market
The nomination led to $1.6 billion in leveraged liquidations and a $111 billion total market cap decrease. Investors reacted to the anticipated tighter monetary policy, affecting major cryptocurrencies over the weekend.
Potential outcomes include a shift towards market discipline, possibly benefiting USD while harming cryptocurrencies. The event mirrors past sell-offs driven by liquidity issues; concerns over Warsh’s approach raise uncertainty in crypto markets. As Seth Basham, Analyst at Wedbush, noted:
“The end of the Fed put under Warsh signals a shift to market discipline that could benefit Treasuries and USD but harm gold, silver, and crypto.”
Comparison to 2022 FTX Collapse
This situation draws parallels with the November 2022 FTX collapse, which caused significant market turbulence. Similar mechanical cascades in other asset classes highlight the effect of margin calls and regulatory uncertainty.
Analysts predict the end of a policy period marked by easier monetary conditions. The shift may favor traditional financial markets while posing challenges for volatile assets such as cryptocurrencies.
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