Kevin Warsh is set to be sworn in as Federal Reserve chair on Friday by President Trump after the U.S. Senate confirmed him in a 54-45 vote. He replaces Jerome Powell as chair, while Powell stays on the Board of Governors. According to reports from crypto.news, Warsh enters the role at a tense time for monetary policy, with President Trump having repeatedly pushed the Fed to lower borrowing costs. However, market pricing now points to a low chance of quick easing, creating a challenging environment for the new chair.
Bitcoin ETF outflows reached a 3-month high of $635 million on the same day that Warsh's confirmation was announced. As reported by CoinDesk, the fastest way for institutions to cut Bitcoin exposure is through ETF sales, with the combination of hot inflation data and Warsh's confirmation hitting institutions simultaneously. Adam Haeems, head of asset management at Tesseract Group, explained to CoinDesk that "A persistently hot CPI, an incoming Fed under Warsh that markets read as more hawkish, or another oil shock can compress bitcoin even with positive net flows." Bitcoin had previously rallied 26% from $66,000 in mid-April to $82,000 last week before hitting a resistance wall.
Warsh brings a unique combination to the Fed chair role - he's the first Fed Chair to take office with disclosed crypto holdings in Bitwise, Flashnet, and Polymarket, while simultaneously being the most hawkish Fed Chair on monetary easing since the financial crisis. According to crypto.news, during his Senate Banking Committee hearing, Sen. Elizabeth Warren warned that a Fed under Trump's control could mean 'granting special accounts to his family's crypto company or bailouts to his friends on Wall Street if they get into trouble.' Warsh's first public statement comes Friday at the swearing-in ceremony, where his tone on inflation could accelerate or stabilize the current institutional repositioning.
Warsh's confirmation has raised questions about Fed independence, particularly regarding crypto policy. At his Senate Banking Committee hearing, Sen. Elizabeth Warren warned that a Fed under Trump's control could mean 'granting special accounts to his family's crypto company or bailouts to his friends on Wall Street if they get into trouble.' According to crypto.news coverage, those remarks linked the Fed chair change to wider crypto policy concerns, with recent crypto.news tracking showing how higher-for-longer Fed policy has weighed on Bitcoin and other risk assets. Treasury yields had already moved higher before Warsh's first days, with the 30-year yield near 5.07% and the 10-year around 4.53%.
The Fed faces significant challenges under Warsh's leadership, including persistent inflation, rising gas prices due to the war in Iran, and a divided policy-making committee. As reported by crypto.news, Warsh has indicated a willingness to consider rate cuts, provided the Fed reduces its large balance sheet and leverages productivity gains from technology. However, his ability to implement such a strategy may be constrained by the current composition of the Federal Open Market Committee, which has shown signs of deepening disagreement. The Fed's official calendar lists the next FOMC meeting for June 16-17, which may force Warsh to show his policy stance as he navigates these complex economic and political dynamics.
