"Acknowledged as Digital Gold" The Warsh Era: A Boon or Bane for Bitcoin?

▲ New Fed era approaching… What should Bitcoin investors expect under the Warsh regime?/AI-generated image

As a new era for the U.S. Federal Reserve (Fed) approaches, the Bitcoin market is also gripped with tension. With Kevin Warsh, known for his hawkish monetary policy stance, set to take office as the next Fed Chair, concerns about short-term liquidity pressure and long-term pro-crypto expectations are simultaneously growing.

According to crypto media outlet Bitcoinist on May 10 (local time), Bitcoin (BTC) has recently risen by approximately 13% over the past month, recovering the $80,000 mark. With Warsh officially scheduled to assume office as the next Fed Chair on May 15, the market is paying close attention to how future changes in U.S. monetary policy will affect the flow of risk assets, including Bitcoin.

XWIN Research Japan evaluated Warsh as a “hawkish policymaker focused on controlling inflation.” In a Senate hearing in late April, Warsh dismissed expectations of interest rate cuts and emphasized the Fed's independence. Even as President Donald Trump continuously pressured for rate cuts, he maintained that monetary policy decisions are separate from political demands. Subsequently, Bitcoin saw a correction to around $75,000, and market expectations for rate cuts quickly cooled.

Bitcoinist explained that Bitcoin has been sensitive to the global liquidity environment in recent years. Indeed, a historical bull run unfolded during the quantitative easing period of 2020-2021, but a massive price correction occurred in 2022 as the tightening stance intensified. In this regard, Warsh's hawkish stance is analyzed as a potential short-term burden for Bitcoin prices.

However, the cryptocurrency industry is also paying attention to another aspect of Warsh. During the hearing process, he described digital assets as “part of the financial services architecture,” and his asset disclosure revealed that he has invested in several cryptocurrency projects. In particular, Warsh positively evaluated Bitcoin, referring to it as the 'digital gold' for the younger generation, while criticizing some altcoins as “software pretending to be currency.”

XWIN Research Japan analyzed that while Warsh's stringent interest rate policy could put short-term pressure on the Bitcoin market, his understanding of the digital asset industry and his opposition to central bank digital currencies (CBDCs) could positively impact long-term institutional investor confidence.

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