Bitcoin (BTC) declined to approximately $74,190, its lowest level in over a month, amid announcement of pro-cryptocurrency Kevin Warsh taking the oath as new Federal Reserve chairman.
The decline is associated to United States President Donald Trump’s nomination of Kevin Warsh as the new Fed Chair.
Warsh’s tight monetary policy stance has prompted risk-off sentiment in the market, while lower liquidity conditions have intensified the decline of market trend.
Market reaction underscores that monetary expectations, not regulatory attitudes, drive BTC’s short-term price movements.
The Historical Pricing Stance
Markets had projected Bitcoin could decline to $60,000 in April, contributing to increased trading activity as traders expect an even higher probability of subsequent declines.
Source: Bitget
In February 2025, the start of the Bitcoin market’s declines appeared along with an increase in the United States Treasury yield to about 4.41%.
Moreover, the 2-year United State Treasury yield is closely associated as it shows market projections for federal funds rate to shift in the short-term.
Its increase over the Fed’s current 3.50% up to 3.75% target range signaled that markets are no longer pricing in a rapid monetary easing under Warsh.
Source: Bitget
Data shows derivatives markets are pricing in a possibility of a 25-basis point hike by December 2026.
Historically, when the 2-year yield climbs above the Fed funds rate, the Fed has often raised rates, tightening liquidity and reducing the appeal of risk assets like Bitcoin. Conversely, falling yields typically support Bitcoin by signaling easier monetary conditions.
Source: Bitget
In contrary, when the yield decline below the Fed funds rate, it is commonly seen as an indicator of projected future rate cuts. Moreover, the changes tend to decline the bullish case for Bitcoin, wherein the market generally takes advantage from declining yields, lower real rates, and improved liquidity conditions.
Warsh’s Dual Identity: Pro-Crypto but Hawkish
Kevin Warsh has long been seen as supportive of Bitcoin and skeptical of central bank digital currencies (CBDCs). He has argued for private-sector innovation in financial technology and described Bitcoin as a “good policeman” that reflects confidence in central bank policy.
Yet, Warsh is also a known inflation safeguard, which complicates the narrative.
Analysts note that his stance on monetary policy is likely to remain cautious, especially amid inflation risks driven by geopolitical tensions such as the Iran conflict and persistent labor market pressures.
This means that while Warsh may favor crypto innovation, he is unlikely to pursue dovish rate policies that would benefit Bitcoin in the near term.
Bitcoin Performance During Fed Leadership Transitions
Bitcoin faced challenges from the past chair transition; it declined 84% after Janet Yellen took the position last January 2014, while 73% after Jerome Powell in February 2018, and 60% after Powell took his second term in May 2022, according to analysts.
Retail and Institutional Sentiment
Retail traders were caught off guard by Bitcoin’s muted response to Warsh’s appointment, especially since his financial disclosures revealed significant exposure to crypto projects.
Many expected a rally, but instead, sentiment on platforms like Stocktwits turned bearish.
Institutional investors, meanwhile, remain cautious. Despite strong ETF inflows earlier in 2026, the combination of higher bond yields and inflationary risks has shifted focus back to macroeconomic fundamentals.
This reinforces the idea that Bitcoin’s trajectory is more closely tied to liquidity conditions than to regulatory leadership.
Broader Implications
Warsh’s appointment illustrates a critical distinction: being pro-crypto on regulation does not equate to being dovish on monetary policy.
For Bitcoin, this means that while regulatory clarity may improve under Warsh, the macroeconomic environment could remain challenging if inflation persists, and rates stay elevated.
The episode also highlights BTC’s evolving role as both a speculative asset and a macroeconomic barometer. Its price movements increasingly reflect broader financial conditions rather than isolated developments in crypto regulation.
