The upcoming leadership change at the US Federal Reserve is being closely watched in the cryptocurrency markets. With Kevin Warsh expected to take over from current Chairman Jerome Powell next month, historical trends have resurfaced.
According to market data, Bitcoin typically experiences a price correction lasting a few months after a new Fed chairman takes office, followed by a stronger upward trend. Therefore, investors are closely watching whether this “correction cycle” will repeat itself this time.
On the macroeconomic front, mixed signals are emerging. In an interview, US President Donald Trump stated he would be disappointed if Warsh did not cut interest rates at his first meeting in June. However, market expectations are that interest rates will remain unchanged at Powell’s final meeting.
On the other hand, James Lavish, a partner at Bitcoin Opportunity Fund, argued that quantitative tightening has effectively ended, noting that the Fed has added approximately $200 billion worth of US Treasury bonds to its balance sheet in recent months. According to Lavish, this signals looser liquidity conditions and could create a potential catalyst for risky assets.
However, Warsh’s past characterization of low interest rate policies as a “serious mistake” and his reservations about balance sheet expansion create uncertainty regarding policy direction. Analysts note that volatility may be seen in Bitcoin and stock markets in the short term, but changing liquidity conditions could pave the way for a new rally in the medium term.
This is not investment advice.