Bitcoin has suffered a dramatic sell-off, collapsing below the critical $70,000 support level to a 15-month low near $67,600. The plunge, which saw over $40 billion in open interest liquidated in 48 hours, is largely attributed to market repricing following President Trump's surprise nomination of Kevin Warsh to be the next Chair of the Federal Reserve, replacing Jerome Powell in May.
Warsh, a former Fed Governor, is historically viewed as a monetary hawk with a strong stance against quantitative easing. Analysts, including Robin Brooks from the Brookings Institution, project he could cut interest rates aggressively by around 100 basis points in his first four meetings, a dovish shift driven by political pressure. However, the market's immediate reaction focused on his well-documented desire to reduce the Fed's balance sheet, sparking fears of a looming liquidity vacuum that has historically fueled crypto rallies.
The technical damage is severe, with Bitcoin now trading well below its 50-day and 100-day moving averages. The sell-off erased gains from early 2026, when Bitcoin briefly touched $95,000, and has pushed it down over 40% from its all-time high near $126,000 in October 2025. Analyst Adam Lynch contextualized the drop, noting Bitcoin's volatility is 3-4x that of equities, making such a correction "just as reasonable" as a typical stock market pullback.
The decline was exacerbated by outflows from spot Bitcoin ETFs, with total assets under management falling below $100 billion. Meanwhile, gold surged to record highs above $5,100 per ounce, indicating a rotation from "risk-on" assets like Bitcoin to traditional safe havens. The market is grappling with the "Warsh Paradox": while the nominee has publicly called Bitcoin "new gold," his anticipated restrictive monetary policy is seen as a direct threat to the excess liquidity that propels crypto markets.
