The appointment of Kevin Warsh to the Fed could exacerbate the decline of Bitcoin

Bitcoin is currently going through a tough period, with its value dropping to around $69,920, while rumors intensify about the possible appointment of Kevin Warsh as head of the U.S. Federal Reserve. This prospect deeply worries cryptocurrency investors, who fear a policy stance hostile to their interests.

Why Warsh’s Nomination Worsens Market Concerns

According to analysts from 10x Research, cited by Odaily, the crypto community perceives Warsh’s potential rise as a major bearish signal. Markus Thielen, the research firm’s founder, explains that the candidate’s profile reflects an economic philosophy diametrically opposed to the fundamentals of digital assets. Market observers fear that this appointment could exacerbate the downward pressures already affecting Bitcoin.

A Restrictive Monetary Policy, Natural Opponent of Risky Assets

The core issue lies in Warsh’s views on monetary policy. This economist strongly advocates three principles: fiscal discipline, higher real interest rates, and a drastic contraction of circulating liquidity. This approach is in complete opposition to the economic thinking that sees Bitcoin as a hedge against monetary inflation. For Warsh, cryptocurrencies are merely speculative vehicles born from an environment of easy money.

The increase in real interest rates—which measure the true cost of borrowing by accounting for inflation—naturally puts downward pressure on all risky assets. Bitcoin, with its volatile and speculative nature, stands to be among the biggest potential losers in such a scenario.

Historical Precedents Fueling Fears

Warsh’s political history reinforces these concerns. Several economists point out that his orthodox positions on money have, in the past, exacerbated economic slowdown cycles, minimizing deflation risks while increasing inflationary tensions. If such an approach were reactivated, it could produce multiplier effects: rising unemployment, a more sluggish economic recovery, and potentially worsening deflationary risks.

The scenario that Bitcoin investors fear would be a combination of this inflexible monetary discipline with an underestimation of the true macroeconomic dangers—an error that could once again amplify economic damage.