The Federal Reserve's interest rate cut expectations change: Bitcoin performs a V-shaped reversal after Kevin Warsh's statement

Federal Reserve Chair Nominee Kevin Warsh explicitly stated at the hearing that Trump never asked him to push for a rate cut. This statement was quickly interpreted by the market as a sign that short-term easing monetary policy will not be accelerated due to political pressure. Bitcoin dropped briefly from around $77,200 after the news, touching below $75,000, then recovered within four hours to a high of $78,400.

This price trajectory, which first declined then rose, reflects the market’s high sensitivity to signals of the Fed’s independence. The $75,000 level, an important recent psychological support, quickly attracted buy orders after briefly breaking below, indicating some funds view this as a medium- to long-term allocation window. As of April 22, 2026, based on Gate market data, Bitcoin’s current price fluctuates around $77,800, with an intraday volatility exceeding 4.5%.

Potential Differences Between Warsh’s Stance and Powell’s Era

Kevin Warsh’s monetary policy stance differs structurally from that of current Chair Powell. Powell prefers gradual interest rate adjustments based on lagging economic data, while Warsh has historically focused more on managing inflation expectations proactively. At the hearing, he emphasized that the Fed’s primary responsibility remains price stability, not short-term economic stimulus coordinated with the administration.

This statement suggests that if Warsh takes office, the Fed may maintain higher interest rates until inflation becomes less sticky. Market pricing for rate cuts in 2026 has been adjusted downward from three to two after the hearing, with CME FedWatch indicating the probability of a June rate cut dropping from 68% to 52%. For the crypto market, this means the asset revaluation driven by dollar liquidity needs recalibration.

Why the “Trump Did Not Request a Rate Cut” Statement Is Focused On

The reason the statement “Trump did not ask me to cut rates” drew attention is because it directly addresses a long-standing market speculation: whether the White House has intervened in Fed independence through personnel appointments. Warsh’s clear denial temporarily eliminated the extreme scenario of politicized rate cuts but also ruled out the market’s previous expectation of “super accommodative easing.”

From asset reactions, Bitcoin’s sensitivity to signals of independence even exceeds that of traditional assets. This is because, in crypto pricing models, stronger Fed independence makes interest rate paths more predictable, which benefits long-term risk assessment. The quick rebound after a brief dip reflects a shift from “disappointment over no rate cut” to “confirmation of a stable policy framework.”

Why $75,000 Became a Key Support Zone

Bitcoin’s rapid rebound after falling below $75,000 highlights the technical significance of this level. On-chain data shows that over 1.2 million BTC holdings are clustered around this price, representing the main trading zone from January to March 2026. When prices break below this area, some short-term panic selling is triggered, but it also attracts buy-ins from previously sidelined investors.

From a macro perspective, $75,000 corresponds to an implied market interest rate pricing of about 1.5 rate cuts in 2026. After Warsh’s statement, market expectations remain above this level, creating a fundamental and technical resonance support at this zone. As of April 22, 2026, Gate data shows that Bitcoin’s trading volume significantly increased during the decline, then remained healthy during the rebound, indicating substantial disagreement between bulls and bears in this region.

What the Rebound to $78,400 Reflects About Market Expectations

The price rebounded from below $75,000 to $78,400, with the high exceeding a 4.5% bounce from the intraday low. This movement is not just a technical correction but a secondary interpretation of Warsh’s overall policy framework. Some institutional investors believe that Warsh’s tendencies toward inflation management and financial deregulation are ultimately bullish for crypto assets.

Specifically, Warsh has publicly supported clearer rules for banks holding crypto assets, contrasting with the current cautious stance. Market expectations suggest that if he takes office, legislation on crypto regulation in the U.S. could accelerate, providing clearer compliance pathways for institutional adoption. This “short-term hawkish on rates, long-term dovish on regulation” mixed outlook explains why Bitcoin can quickly recover after negative news.

How Current Rate Pricing Affects Medium-Term Liquidity for Crypto Assets

As of April 22, 2026, the market prices the federal funds rate at 3.75% to 4.00% by the end of 2026, about 12 basis points higher than before the hearing. For crypto markets, this upward revision mainly impacts two areas: the relative attractiveness of stablecoin staking yields and the cost of leverage trading.

In a scenario where rates remain relatively high, lending rates for stablecoins are expected to stay between 5% and 7%, which will curb over-leveraged perpetual futures positions. Conversely, this environment also weeds out high-risk speculative funds, leading to a healthier market structure. During Bitcoin’s rebound to $78,400, perpetual contract funding rates did not spike abnormally, indicating the rally was mainly driven by spot buying rather than leverage chasing.

Key Policy Events to Watch Post-2026

The market’s focus will shift to two key dates. First, May 2026, when CPI and non-farm payroll data will directly influence the June FOMC rate decision. Second, the Senate vote on Warsh’s official appointment, expected between June and July 2026.

Additionally, the Fed’s semiannual monetary policy report in July will be led for the first time by Warsh, with particular attention to statements on inflation frameworks and crypto regulation. For Bitcoin, the $75,000 to $80,000 range may become a consolidation zone awaiting policy developments, with a breakout requiring clear signals of liquidity easing or regulatory progress.

How to Understand the New Priorities of Non-Farm and CPI Data

Under Warsh’s framework, the importance of labor market data for rate decisions may decline, while inflation data’s influence increases. This marks a significant departure from Powell’s “employment and inflation balanced” approach. It means that even if non-farm employment weakens, rate cuts will be unlikely unless CPI or PCE show clear signs of decline.

Crypto traders need to adjust their reaction models to data releases. Previously, markets might have immediately priced in rate cuts on weak non-farm data, but under Warsh’s approach, the impact of such data could be diminished. The price action after the hearing already confirms this logic: the market did not continue to sell off due to “no rate cut,” but instead reassessed the long-term implications of the policy framework.

Summary

Warsh’s statement at the hearing that “Trump did not ask me to cut rates” alleviated extreme concerns about political interference in the Fed but also ruled out the possibility of unexpected easing in the short term. Bitcoin’s quick rebound from below $75,000 to $78,400 reflects a complex market interpretation of Warsh’s policy stance: hawkish on short-term rates but potentially clearer long-term regulation. As of April 22, 2026, based on Gate data, Bitcoin’s price fluctuates around $77,800, with the market readjusting expectations for the 2026 rate cut path and crypto liquidity. Key upcoming events include May inflation data, the June FOMC meeting, and Warsh’s official appointment vote.

FAQ

Q: Why did Bitcoin first fall then rise after Warsh’s hearing?

A: The initial decline was driven by short-term market reactions to the “no rate cut” signal, while the subsequent rebound was due to investors reassessing Warsh’s potential positive impact on financial regulation and the confirmed independence of the Fed, which supports long-term predictability.

Q: What does $75,000 mean for Bitcoin?

A: This level is a major trading zone from January to March 2026, with over 1.2 million BTC holdings clustered around it, representing the market’s pricing of about 1.5 rate cuts in 2026, providing both technical and fundamental support.

Q: How do Warsh and Powell differ in their monetary policy approaches?

A: Powell relies more on lagging economic data, balancing employment and inflation; Warsh emphasizes proactive inflation expectation management, with less emphasis on labor market data in rate decisions.

Q: How many rate cuts are expected in 2026?

A: After the hearing, the market priced in two rate cuts for 2026, down from three, with the probability of a June cut dropping from 68% to 52%. The actual path will depend on upcoming inflation data.

Q: Has Bitcoin’s current price fully reflected policy changes?

A: As of April 22, 2026, based on Gate data, Bitcoin’s high of around $78,400 has slightly retreated to about $77,800, indicating the market is still awaiting further signals from May CPI data and Warsh’s official appointment process.