The Appointment of Kevin Warsh to the Fed Worries the Markets

It is over for Donald Trump having to deal with Jerome Powell, the stubborn governor who resisted his will. With Kevin Warsh, the American president finally has a man closer to his economic vision. But this change at the head of the Federal Reserve (Fed) does not come without consequences. In a world already shaken by uncertainties, this appointment rekindles fears of a sharp turning point in global monetary policy. And the markets… are already wavering.

Trump’s Fed: The End of “Powellism” and the Return of the Hawk 

Since leaving the Fed in 2011, Kevin Warsh had established himself as a sharp critic of “easy money.” His vision? A more disciplined economy, interest rates adjusted to real productivity, and a less omnipresent central bank. Needless to say, his return to the top, driven by Trump, shakes the markets.

The first effects were quick: gold collapsed, the dollar soared, and the crypto-sphere lost more than 250 billion dollars in a few days. For Nic Puckrin, analyst at Coin Bureau, the message is clear:

If [Warsh] indeed adopts policies aimed at shrinking the balance sheet, markets will have to deal with a lower liquidity environment — a context unfavorable to both risky assets and precious metals.

This more “hawkish” vision is as frightening as it is fascinating. Because Warsh could well reconcile budgetary discipline and political voluntarism, breaking with the passivity of the Powell era. But between rigor and stimulus, the line is fine — and the risk of overcorrection looms.

Economy, Liquidity, and Crypto: Fear of a Market Without Oxygen 

The appointment of Warsh acts like a shockwave on the global economy. Both on Wall Street and the crypto market, the same concern arises: liquidity is drying up. According to Raoul Pal, founder of Global Macro Investor, this panic is not unique to crypto but reflects an unprecedented liquidity drought in the United States.

This lack of fresh money affects all so-called “long-duration” assets, like tech stocks and bitcoin. These markets rely on abundant liquidity to maintain their valuations. However, Warsh has always seen quantitative easing as a public policy mistake. His credo: “free the Fed’s balance sheet and take money out of Wall Street.”

Crypto traders, accustomed to riding waves of monetary easing, now face a windless ocean. The risk? A new era of volatility, where every FOMC decision will impact prices of risky assets. The digital economy thus enters a phase of brutal adjustment: less fuel, more uncertainty.

Warsh, the Fed Surgeon or the Sorcerer’s Apprentice?  

For Michael Avery, economic columnist at BusinessDay, Warsh’s arrival could mark the end of the “Fed Put”, the idea that the central bank would always support markets in the event of a fall. A radical break with forty years of dependence on backstop monetary policy.

Warsh, respected for his integrity, opposes the idea of a Fed as the “buyer of last resort.” He wants a more realistic economy, freed from its liquidity addiction. But this detox cure could be painful. Crypto markets, like traditional investors, fear an overly rigid environment.

Yet, some strategists, like Brian Levitt (Invesco), see in this appointment a necessary evil: a return to an independent Fed, capable of resisting political shocks and Wall Street’s whims.

And paradoxically, by wanting to limit speculation, Warsh could strengthen bitcoin’s legitimacy. In a world where central banks are pulling back, digital gold appears once again as the only alternative to centralized monetary control. The man who worries markets could, despite himself, rekindle the crypto flame.

Key Takeaways — Figures, Facts, and Key Economic Bearings:

• Confirmed appointment: Kevin Warsh succeeds Jerome Powell as Fed Chair (February 2026);
• Market drop: 250 billion $ losses in the crypto market over one weekend;
• Global liquidity: Fed balance sheet reduction planned for 2026;
• Gold and silver: -10% and -30% after Warsh’s appointment;
• BTC Price: 78,538 dollars at the time of writing this article.

Markets now scrutinize every word from Warsh, every figure published by the Fed. But caution: even official statistics can lie. The Truflation platform recently estimated that American inflation is much lower than the Fed claims. What if, in the end, the real economic mirage hides behind the numbers?