US President Donald Trump’s nomination of Kevin Warsh as the next Fed chairman triggered sudden and sharp price movements in the markets.
Following the announcement, the US dollar rose, Bitcoin fell, and volatility increased in equity markets. While there has been some stabilization after the initial shock, investors continue to question the impact of Warsh’s monetary policy approach on both traditional markets and crypto assets.
Kevin Maxwell Warsh served as a member of the Federal Reserve from 2006 to 2011, playing a key role as a link between the central bank and financial markets during the 2008 global financial crisis. Prior to joining the FED, Warsh worked at Morgan Stanley and also served as Special Assistant for Economic Policy and Executive Secretary of the National Economic Council in the White House during the George W. Bush administration. This background gave him experience both on Wall Street and in Washington.
After leaving the Fed, he became a visiting professor at Stanford University’s Hoover Institution, where he authored extensive research on monetary policy, central bank credibility, and the risks of prolonged balance sheet expansion. Warsh is particularly known for his cautious stance on the long-term consequences of excessively expansionary central bank policies.
Current Federal Reserve Chairman Jerome Powell’s second four-year term ends on May 15, 2026. Powell is eligible to remain on the Fed Board of Governors until January 31, 2028. Warsh requires Senate confirmation to take office. However, a vacancy created by Governor Stephen Miran’s interim term ending on January 31, 2026, could allow Warsh to join the Fed Board of Governors before May.
Warsh’s nomination is being closely watched, particularly among digital asset investors. His emphasis on monetary policy discipline, higher real interest rates, and a smaller Fed balance sheet contrasts sharply with the ample liquidity that has historically supported risky assets. Therefore, some market participants view Warsh as a cautious candidate when it comes to Bitcoin and other risky assets.
In his 2015 statements, Warsh approached Bitcoin and cryptocurrencies primarily from a monetary policy perspective. While acknowledging the potential of blockchain technology, he expressed doubts about whether cryptocurrencies would be a stable medium of exchange. “The technology behind that white paper is just software,” Warsh said, arguing that it was a powerful innovation that could increase productivity.
Warsh, who also stated during the same period that Bitcoin could provide market discipline and point out problems in the system that needed to be corrected, noted that it had gained more attention as an alternative currency over time. However, he defined cryptocurrencies as “software that behaves like money” and attributed their rise to speculative excess triggered by loose monetary policies. He argued that such assets could lose their appeal in an environment of tightening global liquidity.
Warsh also argued that central banks should engage with digital currencies and that the US considering a central bank digital currency (CBDC) could be a strategic move against both Bitcoin and China’s digital yuan. The CBDC issue remains a controversial topic within the crypto community due to privacy concerns.
Although Warsh approaches cryptocurrencies cautiously, he also has direct contacts with the sector. Warsh is known for his connections with crypto index fund provider Bitwise Asset Management and his investment in the algorithmic “central bank” project Basis. He also served as an advisor at Electric Capital, a venture capital firm focused on crypto, blockchain, and fintech.
Analysts note that Warsh is not entirely opposed to innovation, but adopts a cautious and financially stability-focused approach to cryptocurrency volatility stemming from the private sector. While he acknowledges that Bitcoin could be a “sustainable store of value like gold,” he argues that sharp rises and falls could signal increased volatility in broader financial markets.
According to market analyst and Adlunam founder Jason Fernandes, Warsh “is not seen as someone hostile to cryptocurrencies.” Fernandes states that a perception of a Fed Chairman more open to interest rate cuts could create a relief rally in risky assets in the short term, but steps taken without macroeconomic justifications will be met with skepticism in the market.
*This is not investment advice.
