Is the Fed leader change a bad sign?...Kevin Warsh's inauguration, will it cause Bitcoin to crash?

▲ Bitcoin (BTC), cryptocurrency decline/AI-generated image

The replacement of the Federal Reserve (Fed) chairman with Kevin Warsh has cast a shadow over the virtual asset and stock markets.

According to a report by CoinTelegraph, a virtual asset media outlet, on April 29 (local time), with Warsh taking office as the next Fed chairman, the market is expected to face several months of losses. Having previously served as a Fed governor, he is considered a prominent hawk. The market fears that he will maintain a high-interest rate stance for an extended period to curb inflation.

Bitcoin (BTC) price reacted immediately to the news of Chairman Warsh's inauguration. The New York stock market and the virtual asset market were gripped by fear that the intensity of tight monetary policy would increase. Experts analyzed that under the Warsh-led Fed, which is expected to implement policies that absorb liquidity, investor sentiment for risky assets would sharply contract. In particular, the market's biggest concern is whether Bitcoin, a high-risk asset hovering around the $60,000 mark, can maintain its key support levels.

Not only Bitcoin but also major tech stocks are experiencing a concurrent decline. Upward pressure on interest rates directly increases companies' funding costs, thereby worsening profitability. Market analysts view this personnel change as more than just a replacement of an individual, but rather as a precursor to a significant paradigm shift in monetary policy. Institutional investors are seen readjusting their portfolio allocations for risk management purposes, preparing for increased market volatility.

In the past, Chairman Warsh emphasized strict discipline over market autonomy even during the financial crisis. The industry believes that this tendency is likely to lead to stronger regulation of virtual assets. Market participants are keeping a close eye on the Fed's future actions and maintaining a conservative investment stance. With the reduction in liquidity supply to the virtual asset market, a clear pattern of decreased trading volume and price adjustments occurring simultaneously is evident.

Market downside pressure is expected to continue until the Fed's policy direction becomes clear. Each official statement from Chairman Warsh acts as a variable directly influencing asset prices. Investors are formulating response strategies by confirming changes in macroeconomic indicators. With the Fed's strong commitment to tightening confirmed, the market is expected to maintain a heavy trend for the time being.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*