"Bitcoin is the new gold for the younger generation"…All eyes on the inauguration of 'pro-crypto' Fed Chair Kevin Warsh

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

With Kevin Warsh, a strong proponent of virtual assets, abruptly taking office as the new head of the U.S. Federal Reserve (Fed), the command center of global financial policy, the attention of investors worldwide is focused on whether the cryptocurrency industry, which had been constrained by strict pressure from authorities, will enter a phase of historic deregulation and major transformation.

According to the cryptocurrency media outlet Watcher.Guru on May 22 (local time), the U.S. Federal Reserve welcomed new Chairman Kevin Warsh as its new leader, whose term began this Friday. The biggest reason the virtual asset industry is cheering his inauguration is his unique 'pro-coin' stance in the past. In an interview with CNBC in January 2021, coinciding with Bitcoin (BTC) breaking the $30,000 mark for the first time, Chairman Warsh declared, "Bitcoin is like the new gold for the younger generation under 40," officially recognizing its asset value. Furthermore, he is also an actual investor who has directly funded numerous virtual asset-related projects.

Thanks to this background, prominent virtual asset advocates in the U.S. Congress are also enthusiastically welcoming his appearance. Republican Senator Cynthia Lummis praised him, stating, "Digital asset holders finally have a true leader ready to complete virtual asset regulatory reform as the head of the Fed," not hiding her expectations. However, due to internal Fed regulations strictly prohibiting key senior officials from directly holding personal stocks or virtual asset-related assets, Chairman Warsh must sell off his entire existing virtual asset portfolio before officially beginning his duties. Nevertheless, experts predict that, considering his long-standing philosophy and investment history, the cryptocurrency industry is highly likely to fully flourish within the institutional framework during his tenure, regardless of the sale.

The political dynamics and the nature of changes in monetary policy also have significant potential to act as a positive catalyst for the virtual asset market. U.S. President Donald Trump has consistently pressured for interest rate cuts, but during his tenure, former Chairman Jerome Powell resisted, leading to serious conflict. In contrast, newly inaugurated Chairman Warsh is classified as an individual whose policy direction aligns with President Trump's, leading to a dominant view that he would promptly implement interest rate cuts immediately after taking office. Typically, when benchmark interest rates fall, global liquidity becomes abundant, and the preference for risk assets is maximized, becoming a powerful catalyst for large-scale capital inflows into the virtual asset market, including Bitcoin.

However, the current challenging macroeconomic conditions he faces emerge as a short-term variable. Recently released U.S. inflation figures exceeded market expectations, and with the continued surge in international oil prices and high government bond yields, there is pressure that he might need to maintain a long-term high-interest rate stance rather than rushing to cut benchmark rates. Chairman Warsh has not yet stated a specific official position on inflation response and the direction of interest rates as of his inauguration day.

In conclusion, the launch of the Kevin Warsh regime is a clear signal heralding a long-term institutional tailwind for the virtual asset market. Investors should formulate their future position strategies by observing whether he will overcome the short-term barrier of inflation concerns and implement interest rate cuts as demanded by President Trump, and how much favorable policy deregulation he will present to the virtual asset sector using the Fed's powerful authority.

*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.*