On Friday, President Trump unveiled his selection of Kevin Warsh as the nominee to serve as the next Chair of the Federal Reserve, succeeding Jerome Powell. This announcement quickly reverberated through financial markets, prompting significant movements in currency and cryptocurrency valuations. Notably, Bitcoin experienced a pronounced decline, slipping below the $83,000 mark shortly after the news became public.
Kevin Warsh's nomination has altered the market's interpretative framework concerning forthcoming Federal Reserve policy. Analysts have highlighted that Warsh's well-known stance as an inflation hawk and his strong endorsement of a robust U.S. dollar are likely to have considerable influence on market expectations and reactions.
Technical analyst Kyledoops elucidated that under Warsh's potential leadership, the Federal Reserve's policy signals would be perceived differently. The market currently regards Warsh as someone whose inclination might lean toward maintaining tightened monetary conditions. Therefore, even a subtle indication by Warsh toward monetary easing would be perceived as particularly significant. This shift in perception could result in notable adjustments across various asset classes, including the U.S. dollar, Treasury yields, risk-sensitive assets, and digital currencies such as Bitcoin.
Immediately following the nomination announcement, the U.S. dollar strengthened, reflecting a market adopting a more hawkish outlook on interest rates. Concurrently, prices of precious metals and cryptocurrencies decreased substantially, aligning with the narrative of elevated interest rates being less favorable for such assets.
Examining Bitcoin's price movements, crypto market analyst Kevin provided insight into technical benchmarks that historically serve as critical support during bull markets. Specifically, Bitcoin's two-day 200 Exponential Moving Average (EMA) and Simple Moving Average (SMA) have acted as key levels where significant corrections have paused and reversed upwards in past cycles.
However, this cycle presents a different scenario. Bitcoin has broken below both the two-day 200 EMA and SMA levels. Although the cryptocurrency managed a countertrend rally upwards of approximately 21% to 22%, it faced robust resistance between $95,500 and $106,800, resulting in a sharp rejection within this price range.
Kevin noted that this pattern closely mirrors previous market cycles, emphasizing that failure to recapture these moving averages signals a transition into an intensified bearish phase. Should Bitcoin's price decline further below the support range of $79,000 to $80,000, this would confirm a larger timeframe downtrend. In such an event, the market could expect Bitcoin's valuation to move toward the $70,000 to $75,000 range.
Technical momentum indicators and money-flow metrics also reflect weakening market conditions. Declining spot trading volume combined with a reduction in activity among large holders, often referred to as "whales," diminishes the likelihood of a sustainable price recovery in the near term.
This environment suggests heightened caution among investors, as the interplay between Federal Reserve leadership expectations and Bitcoin's technical patterns shape market sentiment and potential price trajectories.