Trump Expected to Nominate Bitcoin-Friendly Kevin Warsh as Next Fed Chair
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US President Donald Trump is expected to nominate Kevin Warsh as the next chairman of the Federal Reserve, with an official announcement expected Friday morning.
Key Takeaways:
Kevin Warsh has emerged as the clear favorite to succeed Jerome Powell as Fed chairman.
Markets reacted to expectations of a more hawkish Fed as the dollar strengthened and Treasury yields rose.
Warsh's relatively positive view of Bitcoin may signal a shift toward digital assets at the Fed.
Several media outlets, including Bloomberg, have reported that Warsh is Trump's pick to replace President Jerome Powell, whose term ends in May.
Reuters earlier reported that Trump met with Warsh on Thursday, citing a source who said the former Fed governor had made a strong impression.
Warsh is emerging as the clear favorite for Fed chairman as the forecast increases
Warsh He served on the Federal Reserve Board of Governors from 2006 to 2011 and has remained influential on monetary policy since leaving the central bank.
Prediction markets quickly reflected the change. In Polymarket, Warsh's chances of being selected have risen from 30% to 95%, while former front runner Black Rock's Rick Reeder has seen his odds drop significantly.
Warsh played out a similar dynamic on the 93% overpriced Calci, with economist Kevin Hassett and Ryder far ahead.
Warsh is seen as a more hawkish candidate who favors fiscal discipline, a tough stance on inflation and moves away from quantitative easing.
As investors adjust their expectations of future monetary policy as the US dollar strengthens and Treasury yields rise, expectations of a candidacy have already passed in the market.
Unlike Powell, who has often downplayed bitcoin's role in the US financial system, Warsh expressed a more accepting view of the cryptocurrency.
In an interview with the Hoover Institution in July, he argued that Bitcoin does not threaten the Fed's authority and can instead act as a market feedback loop.
“Bitcoin doesn't bother me,” Warsh said at the time, adding that it could “provide market discipline” and serve as “a very good policeman for policy.”
His comments resonated with crypto market participants who see Bitcoin as a hedge against policy mistakes.
If confirmed, Warsh's appointment would mark a significant shift in tone at the Fed, with potential implications for risk assets as well as the broader debate over digital currencies in the U.S. economy.
Fed Standoff Expects Rates As Bitcoin Struggles For Momentum
US President Donald Trump has piled pressure on Jerome Powell, including threats of a criminal investigation, but the Federal Reserve has again kept interest rates low, citing tight growth and still-high inflation.
Powell declined to comment on the investigation and defended the Fed's independence, warning that politicizing monetary policy would undermine the institution's credibility.
The decision weighed on Bitcoin, which has slipped since the announcement and has repeatedly traded above $90,000.
Analysts say the lack of recent rate cuts is limiting demand for risk assets, even as stocks and gold hit new highs.
Forecast markets and Wall Street forecasts point to a low chance of a slowdown before the middle of the year.
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