Although Kevin Warsh is known for his strong support of cryptocurrencies, he is set to be confirmed as the next Federal Reserve Chair. possible spelling Bitcoin faces short-term challenges.
History has shown that changes in Federal Reserve leadership have always preceded large-scale sell-offs in the cryptocurrency market.
The current macroeconomic environment suggests that history may repeat itself.
The Fed Chair curse
Since 2014, each change in the chair of the Federal Reserve has been followed by a significant sell-off in Bitcoin.
For example, when Janet Yellen took office as Chair of the Federal Reserve, Bitcoin experienced an 86% plunge.
In 2018, when Jerome Powell officially became Chair of the Federal Reserve, cryptocurrency prices plummeted by 74%.
When Powell began his second term in 2022, Bitcoin experienced another 60% plunge.
Bitcoin is currently trading at $77,367, and the upcoming leadership change may already be causing unease among some cryptocurrency market participants.
High interest rates and Wash's pro-Bitcoin paradox
Wash is widely regarded as one of the most pro-crypto candidates in Fed history. He has publicly praised Bitcoin as "an important asset" and a indicator of monetary policy.
However, his personal stance may not be enough to protect digital assets from short-term macroeconomic headwinds.
Wash is stepping into a challenging environment for risk assets. When he takes over the economy, current interest rates are at 3.5%, with only one rate cut expected by 2026.
Jerome Powell's term as head of the U.S. central bank will officially end on May 15.
Powell just chaired his final Federal Open Market Committee (FOMC) meeting as Fed Chair, during which the committee made its most divided decision since 1992, keeping interest rates unchanged.
In summary, Bitcoin may face volatility in the coming months.