How the New US Fed Chair Could Impact the Crypto Market

Key Insights:

• Preliminary reports claim that Warsh is pro-crypto. Here’s what this means for the market from a monetary policy point of view.
• Warsh’s past roles in crisis management at the Federal Reserve may offer insights into his views on markets, given the current state of events.
• A look at how Warsh aligns with Trump’s agenda versus Powell’s restrictive approach to the market.

It’s been a rough week for the crypto market, with headlines highlighting bearish outcomes amid an unfavorable macro environment. However, the market just got a positive headline. The US President Donald Trump reportedly appointed Kevin Warsh as the new Federal Reserve chairman.

Warsh is slated to take over after Jerome Powell, whose tenure ends in May. His appointment is already drawing excitement from the crypto market. This is because numerous reports have painted Warsh as pro-crypto.

He expressed his thoughts about Bitcoin in an interview during which he maintained positive sentiments after learning about the cryptocurrency.

The fact that Warsh maintained a positive attitude about Bitcoin has the market excited about the future. This may have contributed to Trump’s decision to appoint him as the new US FED Chair. That’s because the POTUS has been aligning with individuals who align with his pro-crypto agenda.

Why Warsh’s Past Makes Him an Ideal FED Chair Candidate?

Trump also appointed Warsh as the next US FED chair based on Merit. The US is currently entering uncharted waters that require unique monetary policy approaches, particularly considering the current debt situation and economic pressures.

Interestingly, Warsh may be ideally suited to helm the FED during turbulent times. This is because he previously served as the FED governor during the 2008 financial crisis.

His service at the time makes him ideally suited to help the FED navigate or streamline monetary policy amid uncertainty. Moreover, he has shown a positive attitude towards Bitcoin and crypto in general. Thus, He may be the right person to guide the FED as crypto becomes a growing part of finance.

Some key industry figures, including Michael Saylor, believe that Warsh’s position on crypto makes him the ideal person for a crypto-friendly FED. However, it is worth noting that Warsh has been known to lean more towards the hawkish side. He was particularly hawkish during the 2008 financial crisis.

How Does Kevin Warsh Compare with Jerome Powell?

Understanding how Warsh and Powell compare when it comes to FED policy may offer insights into pertinent questions about the former’s upcoming tenure.

During recent months, President Trump criticized Powell for being slow to slash rates or for a higher-for-longer policy on rates. Powell’s FED leadership has been heavily focused on combating elevated inflation.

Meanwhile, Warsh previously advocated for price stability during his tenure as FED governor. He also sided with Trump in criticizing the FED for not slashing rates sooner. Warsh’s alignment with Trump suggests that he may push towards lower rates during his tenure. This may create a favorable environment for crypto adoption.

Since higher inflation contributes to unemployment, the FED may opt to adopt a policy that focuses on maximum employment and price stability. This may point to an environment with lower rates during Warsh’s tenure.

However, it is worth noting that economic pressures may lead to a hawkish stance, which has historically starved crypto of liquidity flows.

Trump’s criticism has also been seen as an attempt to push the FED to do his bidding. A pro-crypto FED chair may not only align with Trump, but also with other regulatory institutions, such as the SEC, whose current head is also pro-crypto. One of the key benefits for the crypto market would be the deeper integration of crypto into the US financial system.