The Fed’s decisions matter for crypto markets because digital assets tend to behave like so-called risk-on investments. When interest rates are high, safer yields such as U.S. Treasurys become more attractive, drawing capital away from volatile assets like cryptocurrencies. Lower rates, by contrast, increase liquidity in the financial system and often push investors toward higher-risk bets. A stronger dollar, typically associated with tighter Fed policy, has also historically weighed on Bitcoin prices.
"Bitcoin only rallied after 1 out of 8 [Federal Open Market Committee] meetings in 2025, even during a cutting cycle that should theoretically benefit risk assets," it added, referring to the committee at the Federal Reserve that makes decisions about interest rates.
Trump’s choice of Warsh follows years of tension between the White House and Powell. Since Powell’s confirmation in 2018, Trump has pressed the Fed to cut rates more aggressively and has accused the central bank of undermining economic growth. That pressure intensified last year, when the Justice Department subpoenaed Powell over the Fed’s construction project, a move Powell described as a pretext to influence monetary policy. Warsh himself added to the debate in a CNBC interview last summer, calling for “regime change” at the Fed.
Warsh is seen as more hawkish than Powell, especially given his past criticism of quantitative easing and the Fed’s balance sheet expansion, according to Shady El Damaty, CEO and co-founder at Holonym. "That’s raising concern about how aggressive he might be with rate policy if inflation ticks up again. For crypto, the real issue is uncertainty right now, nobody knows if he’d follow through on those views, especially in an election year where pressure to maintain liquidity will be intense,” he told Decrypt.
"If markets stay skittish, it could slow risk-on flows into crypto in the short term," El Damaty added, noting that in the longer term, more hawkish Fed leadership "may actually strengthen the crypto narrative, especially for Bitcoin, as a hedge against tightening and centralized monetary control."
Kevin Warsh and cryptoWarsh, 55, is a former investment banker who served on the Fed’s Board of Governors from 2006 to 2011, becoming the youngest governor in the institution’s history. He later advised the Bank of England on monetary-policy reforms and is now affiliated with the Hoover Institution and Stanford Graduate School of Business, while also working at Duquesne Family Office alongside investor Stanley Druckenmiller.
"Kevin Warsh made an impassioned argument for a CBDC in one of the biggest newspapers in the world," Nick Anthony, policy analyst at the Cato Institute's Center for Monetary and Financial Alternatives, told Decrypt.
"Backtracking will either mean an admission that he was wrong about the problem or wrong about the solution. Either case is not good for his potential standing as the chair of the Federal Reserve."
"I am skeptical that a host of private cryptocurrencies are sufficiently strong and reliable proxies for the U.S. dollar," Warsh wrote.
"I also doubt that bank-like regulation of private stablecoins would ensure their stability in stressful times, absent government bailouts."
