“Will Cut Off the Money Supply”…Trump’s Words, a Variable to Sway the Bitcoin Market

▲ Bitcoin (BTC) and Cash

Kevin Warsh, nominated by U.S. President Donald Trump as the next Federal Reserve Chairman, is creating tension across the virtual asset market by emphasizing a stance of liquidity tightening.

According to Cryptopotato, a virtual asset specialized media outlet, on April 22 (local time), Warsh attended a Senate confirmation hearing and emphasized the necessity of quantitative tightening, centered on reducing the Federal Reserve's balance sheet and absorbing liquidity. He diagnosed that the era of unlimited liquidity supply has entered its final phase and mentioned the need to normalize the asset market structure.

Signals of liquidity tightening have complex effects on the virtual asset market. If liquidity decreases, there is a possibility of slowing capital inflow into Bitcoin (BTC) and major altcoins, which are classified as risk assets. Conversely, the fact that Warsh holds a virtual asset portfolio worth 130 million dollars complicates market interpretations even further.

Warsh regards Bitcoin as a key indicator showing the prelude to inflation and perceives it as an important signal for understanding macroeconomic trends. Analysis suggests that while liquidity contraction may cause short-term price adjustments, it could also serve as an opportunity to strengthen Bitcoin's position as a store of value in the long term.

Currently, Bitcoin is trading around the $79,000 mark, attempting to break past $80,000. Throughout April, approximately $2 billion flowed into Bitcoin spot ETFs, maintaining a solid supply and demand base. If Warsh's policy direction leads to inflation control and restoration of financial confidence, the pace of institutional capital inflow is likely to accelerate further.

Warsh's nomination as Federal Reserve Chairman is regarded as a significant turning point in the institutionalization process of the virtual asset market. With policy directions based on an understanding of digital assets being presented, Bitcoin's status as a macro asset is becoming increasingly prominent.

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