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Despite Kevin Warsh's reputation as a distinctly pro-crypto figure, his looming confirmation as the next Federal Reserve Chair might spell short-term trouble for Bitcoin.
History shows that changes in Fed leadership have consistently preceded massive selloffs in the cryptocurrency market.
Current macroeconomic conditions indicate that history might repeat itself this time around.
The "Fed chair curse"
Bitcoin has experienced a significant selloff around every Federal Reserve chair transition since 2014.
For instance, when Janet Yellen transitioned into the role of Fed Chair, Bitcoin suffered a massive 86% crash.
When Jerome Powell officially became Fed Chair in 2018, the cryptocurrency plunged by 74%.
At the start of Powell's second term in 2022, Bitcoin experienced another severe drop of 60%.
Bitcoin is currently changing hands at $77,367, and the next leadership transition might already make some crypto market participants nervous.
High Rates and Warsh's Pro-Bitcoin paradox
Warsh is widely viewed as one of the most crypto-friendly nominees in the Fed's history. He has publicly praised Bitcoin as "an important asset" and an indicator of monetary policy.
However, his personal stance may not be enough to shield digital assets from immediate macroeconomic headwinds.
Warsh is set to inherit a difficult environment for risk assets. He is taking over the economy with interest rates currently sitting at 3.5% and only one projected rate cut remaining for 2026.
Jerome Powell's term as the head of the U.S. central bank will officially conclude on May 15.
Powell just presided over his final Federal Open Market Committee (FOMC) meeting as Fed Chair, where the committee held interest rates steady in its most divided decision since 1992.
The bottom line is that Bitcoin could face a turbulent few months.