Bitcoin dropped to $74,190 over the weekend, its lowest price in over a month, just one day after Kevin Warsh was sworn in as the 17th Chair of the Federal Reserve Board of Governors. Warsh, considered a crypto-friendly Fed chair, has publicly said Bitcoin "does not make me nervous" and disclosed personal crypto investments. However, his appointment has sparked fears of tighter monetary policy.
Inflation at 3.8% remains stubbornly above the Fed's 2% target, and Warsh's past commentary favors hawkish measures. Market expectations for rate cuts in 2026 have been slashed, with short-term bond yields rising. Bitcoin's sensitivity to Fed policy mirrors the 2022 bear market, where aggressive rate hikes under Jerome Powell crushed BTC by 65%.
If the Fed signals even a modest rate hike, Bitcoin could face further downside. The $74,000 level is a psychologically important zone. A sustained break below it would likely trigger additional selling from leveraged positions. Traders should watch 2-year treasury yields as a leading indicator. If they continue climbing, the bond market is effectively betting on tighter conditions under Warsh. His four-year term runs through May 21, 2030.