Donald Trump May Pick Bitcoin Ally Kevin Warsh as Next Fed Chair

Donald Trump is reportedly close to naming Kevin Warsh as the next Federal Reserve chair. The announcement is expected on January 30. Market reactions hint at caution on Bitcoin price and crypto assets in general in the near term.

Kevin Warsh Becomes Donald Trump’s Top Choice for Fed Chair Job

Kevin Warsh, a former Federal Reserve governor, has shot to the top of the Donald Trump’s shortlist. On prediction markets such as Polymarket, Warsh’s odds increased to 95% after his Thursday meeting with Donald Trump.

Warsh is said to have impressed the president during the private meeting. In contrast, the odds of earlier favorite Rick Rieder fell to only 3.4%, according to traders on Kalshi and Polymarket.

With the term of Fed Chair Jerome Powell coming to an end in May 2026, Trump plans to appoint a new head this week. Warsh’s tenure in monetary policy and finance makes him a compelling choice.

He served as a Fed governor from 2006 to 2011, and has served since then as an advisor in the private sector.

While Warsh is regarded as crypto-aware, markets are reacting more to his expected hawkish monetary policy. Bond yields rose, and the US dollar strengthened as traders priced in a more conservative Fed outlook under Warsh.

Bitcoin Price Under Pressure Amid Hawkish Expectations

Despite Warsh’s relatively favorable view of Bitcoin, the market was cautious. Bitcoin price was around $82,300, reflecting liquidity concerns.

Warsh is famous for favoring inflation control and conservative interest rate policies. He is in favor of a balance sheet contraction and tighter fiscal conditions. That’s a bearish combination for risk assets such as Bitcoin.

Traders fear a Warsh-led Fed will slow rate cuts. They worry Donald Trump’s choice could halt easing later this year. This is important because Bitcoin often rallies in looser monetary conditions because of its popularity as a non-sovereign asset.

Arthur Hayes, the founder of BitMEX, recently stated that Bitcoin needs renewed liquidity. He argued that without fresh inflows, the asset will remain stuck in its sideways trading range.

His comments highlight the importance of capital movement for driving the next breakout in Bitcoin’s price action. A hawkish Fed stance may postpone such a breakout.

Gold prices, in contrast, surged to $5,200 amid the uncertainty. The divergence between Bitcoin and gold continues, with investors considering gold the safer inflation hedge for the time being.

Warsh’s Dual Perspective on Bitcoin and Crypto Markets

Kevin Warsh has been nuanced about crypto and the difference between Bitcoin and other digital assets. In an interview in 2023, he said Bitcoin does not bother him, and he sees it as a “useful signal for policy.”

He compared Bitcoin to gold and how it serves as a store of value. However, he is skeptical of other private cryptocurrencies, previously describing them as “software pretending to be money.”

Warsh’s work with Bitwise, a crypto index fund manager, and investments in stablecoin projects solidify his prochoice market leanings. His credentials include support of institutional crypto infrastructure and innovation.

Still, Warsh is not an advocate for unregulated crypto expansion. He has advocated for clearer frameworks to improve market transparency and regulatory oversight.

He also advocates for a potential US central bank digital currency (CBDC) to offset China’s digital yuan strategy. This comes alongside other policymakers calling for a faster digital dollar rollout.

What to Expect if Warsh Is Appointed as Fed Chair

Markets are now expecting a formal announcement on January 30th. Warsh’s leadership has the potential to alter expectations around both interest rates and digital asset policy.

Prediction markets strongly favor his selection. Polymarket has it at 95% chance of being named, far ahead of other contenders such as Kevin Hassett and Chris Waller.

If Warsh is confirmed, the Fed could tighten conditions. Higher borrowing costs may persist. This trend could extend through 2026. That could mean fewer rate cuts or even a longer pause in easing.

A Warsh-led Fed would be able to provide regulatory clarity while restricting monetary support. Policy caution shapes the near-term outlook for Bitcoin. Regulatory advancements create a stronger foundation for growth. Donald Trump’s influence adds weight to long-term opportunities.