Bitcoin Stalls Near Two-Month Low as Warsh Fed Pick Fails to Offset ETF Exodus
(MarketWatch) — Bitcoin hovered near its lowest level in two months on Thursday, failing to find momentum from Donald Trump's nomination of Kevin Warsh as the next Federal Reserve Chair. The announcement, which some traders had hoped would provide a bullish catalyst, was overshadowed by another wave of redemptions from U.S. spot Bitcoin exchange-traded funds (ETFs).
The world's largest cryptocurrency slid as much as 4% to $81,045 before trimming losses to trade around $84,000. The market's tepid reaction underscores a deeper skepticism. While Warsh, a former Fed governor, has recently echoed Trump's calls for lower interest rates, his established career within traditional finance and past hawkish leanings have left crypto investors uncertain about his ultimate policy direction.
"The market wanted a clear signal, but Warsh's record is a mixed bag for digital assets," said Hayden Hughes, general partner at Tokenize Capital. "His nomination supports the narrative for lower rates in the medium term, but he's a cautious economist by trade. The fear is he may prioritize fighting inflation over stimulating growth, which isn't the quick fix some were betting on."
Instead of a rally, a risk-averse tone gripped broader markets following the news. Equities fell and the dollar remained weak, but the traditional 'risk-off' play failed to benefit Bitcoin. Data reveals a stark picture: Bitcoin is now down over 30% from its October peak, and U.S. spot Bitcoin ETFs have now seen three consecutive months of net outflows—the longest streak since their high-profile launches in 2024. Bloomberg data indicates approximately $5.7 billion has exited these products in that period.
The sustained withdrawals highlight a significant shift in investor appetite. BlackRock's iShares Bitcoin Trust (IBIT), once a record-breaking fund launch, has now been surpassed in total assets by the firm's own gold ETF (IAU). This rotation challenges a core tenet of crypto investing.
"The 'digital gold' thesis is facing a serious stress test," noted Alex Kuptsikevich, chief market analyst at FxPro. "In times of genuine geopolitical uncertainty, money is flowing into physical gold and Treasuries, not Bitcoin. It suddenly looks less like a hedge against irresponsible fiscal policy and more like a speculative tech asset." This sentiment is quantified by Bitcoin's value against gold itself, which has plunged roughly 60% from a late-2024 high.
Amid the gloom, one major exchange is making a contrarian bet. Binance announced it would convert the roughly $1 billion in its SAFU emergency insurance fund from stablecoins to Bitcoin over the next month, a move interpreted by some as a long-term vote of confidence.
For now, however, technical pressure is mounting. Over $1.4 billion in long leveraged positions across cryptocurrencies were liquidated in the past 24 hours, according to CoinGlass. Analysts warn the path of least resistance remains lower.
"Buyers are emerging around these levels, which is containing the price between $85,000 and $90,000 for now," said Jake Ostrovskis, head of OTC trading at Wintermute. But other voices are more bearish. "I wouldn't be shocked to see BTC test the $70,000 range soon," warned Adam McCarthy, a research analyst at Kaiko. "A break below $80,000 could trigger a sharper slide into the weekend, exacerbated by typically thinner liquidity."
Tony Sycamore, market analyst at IG Australia, viewed the sell-off as confirmation that Bitcoin's rally from November lows was merely a correction within a larger downtrend. "The decline overnight suggests the primary downtrend has now resumed," he said.
Market Voices: A Split on the Bottom
Rebecca Cho, Portfolio Manager at Horizon Digital Assets: "The ETF outflows are a concern, but they represent a normalization after an unprecedented influx. The Binance SAFU conversion is a powerful signal from within the industry. We see this as a consolidation phase, not a breakdown."
Marcus Thorne, Independent Crypto Trader: "This is capitulation. The Warsh pick was the last hope for a macro narrative to save the price, and it failed. The 'digital gold' story is dead when it acts like a risk-on tech stock. We're retesting the real support zone now, and $80,000 might not hold."
Dr. Aris Feldman, Economics Professor at Carlton University: "The market's reaction is rational. Warsh is an institutionalist. His appointment reduces the likelihood of politically-driven, extreme monetary easing, which was a key pillar of the recent crypto bull thesis. This is a fundamental repricing."
"CryptoCassie," a popular social media commentator: "Absolute joke. The ETFs were supposed to bring stability and institutional forever-money. Instead, they're just an easy exit ramp for the weak hands. And now the Fed gets another old-guard banker? They're all in the same club, and we're not in it. This isn't a dip; it's a revelation."
—With reporting by Matthew Brockett and Melos Ambaye.
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