Warsh Fed Nomination Sparks $74,604 BTC Low – January 2026

President Donald Trump nominated Kevin Warsh to be the next chair of the U.S. Federal Reserve, reviving debate over a potentially more hawkish policy mix. The announcement came days after the Fed held rates at 3.5%–3.75%, and risk assets sold off as traders focused on tighter liquidity and “higher-for-longer” risks across equities and crypto.

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Context

On Jan. 28, the Federal Open Market Committee kept the federal funds target range at 3.5%–3.75% and said inflation remains “somewhat elevated,” reinforcing a restrictive stance. The decision was not unanimous, with two voting members dissenting in favor of a 25 bp cut, highlighting internal tension over how quickly easing can begin.​

Two days later, the White House said Trump nominated Kevin Warsh as Fed chair, putting a former crisis-era policymaker back into the market narrative. Warsh served as a Federal Reserve governor from 2006 to 2011, a period that included the global financial crisis and the early use of unconventional policy tools.

Details

Bitcoin extended a sharp drawdown into early February as macro headlines collided with fragile positioning in leveraged markets. BTC fell to $74,604 around 3:40 a.m. UTC on Feb. 2, while prior reporting pegged the October peak near $120,000, implying a roughly 35% decline from that high.

Derivatives data showed forced selling pressure over the weekend. About $2.2 billion in crypto futures positions were liquidated in a 24-hour window on Feb. 1, including $961 million in Ethereum liquidations and $679 million in Bitcoin liquidations, according to Coinglass exchange data cited by Tapbit.​

Flow data suggested marginal demand was also under pressure. Bitcoin spot ETFs recorded a $510 million net outflow on Jan. 30, according to a market update that cited ETF flow tracking. CoinMarketCap’s Feb. 2 historical snapshot put total crypto market cap at about $2.61 trillion, with Bitcoin dominance at roughly 59.4%.

“The real question is which version of Kevin Warsh will emerge,” David Wessel, Director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, said on Jan. 30 in a PBS NewsHour segment discussing the nomination. Wessel framed investor uncertainty around whether Warsh would prioritize the Fed’s dual mandate or align more closely with Trump’s policy preferences.​

Impact

The core transmission mechanism for crypto was macro: restrictive rates and balance-sheet restraint typically tighten financial conditions and reduce liquidity for risk assets. Reuters also tied the selloff to balance-sheet expectations, quoting Wilson Asset Management portfolio strategist Damien Boey on how markets react when investors consider support being withdrawn.

“As discussions arise about withdrawing that support … all the hedges that investors have sought against balance sheet growth – gold, crypto, and certainly bonds – begin to experience selling pressure,” Boey said, as cited by Reuters on Jan. 30. That framing matters for institutional allocators because it links crypto performance less to sector-specific narratives and more to the same liquidity regime that drives equities and credit.

Cross-asset moves reinforced the risk-off tone. Gold peaked near $5,600/oz on Jan. 29 before later trading in the $4,780–$4,890/oz range, while the dollar index was cited near 97.14–97.16 in early February pricing. In crypto sentiment, the Fear & Greed Index printed 18 (Extreme Fear) on Feb. 2.

Next Steps

The nomination now enters the Senate confirmation process, which will determine whether Warsh takes the chair. Jerome Powell’s chair term ends May 15, 2026, leaving several policy decisions under the current leadership before any handover.

Near-term monitoring is straightforward and measurable: Fed messaging on the path for rates, spot Bitcoin ETF flow persistence, and leverage conditions that can trigger further liquidation cascades. Markets will also watch whether crypto market cap stabilizes around current levels after the weekend’s forced selling.

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P.S. This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and make independent decisions.