#加密市场观察 Powell maintains dignity in the handover, the Federal Reserve crushes the printing press: the crypto market is about to迎来 the most hardcore liquidity meat grinder

In this magical real world, the most efficient way to force the world's most powerful central bank governors to step down early is not to hold lengthy hearings on Capitol Hill, but to send the Department of Justice to investigate whether there are any tricks in their office renovation accounts. When U.S. federal prosecutor Jeanine Pirro casually announced on social media that she was stopping the criminal investigation into the Fed Chair Powell's $2.5 billion building renovation project, Wall Street's suit-wearing thugs didn't even blink, directly casting votes with real money on the Kalshi prediction market. Within just a few minutes, the probability that Kevin Warsh, Trump's nominee to succeed Powell, would be confirmed by the Senate before May 15 skyrocketed from a pitiful 30% to 86%. This is the game of power, with no pretense involved. A political coup under the banner of anti-corruption ended in a hilariously effective way. Powell retained his last shred of dignity, while Trump got the power vacuum he desired. But the real climax of this show isn't who sits in that chair, but how the upcoming, $226 million, the richest Federal Reserve Chair in history plans to throw the global market’s liquidity lifeline into a roaring meat grinder. For Web3 industries and crypto markets accustomed to relying on "central bank liquidity injections" to forcibly prolong life, the old narrative script has been torn to shreds, and a macro-level reshuffle of cards is silently unfolding.

Pull out that macro IV of $6.7 trillion
If Powell is a delicate balancing act trying to juggle inflation and employment, then Kevin Warsh is a demolition director wielding a sledgehammer.
At the two-and-a-half-hour hearing before the Senate Banking Committee, Warsh spat out nine words that could haunt Wall Street nightmares: "Fed needs to get out of the fiscal business." This phrase's destructive power far exceeds any tired clichés about rate hikes or cuts. The core of capital markets isn't the absolute interest rate, but the size of the balance sheet. From the 2008 financial crisis to 2022, the Fed's balance sheet expanded from less than $900 billion to nearly $9 trillion. Although Powell's era has begun quantitative tightening (QT), shrinking this number to $6.7 trillion with difficulty, Warsh sees it still as an unwieldy monster. In his eyes, the Fed holds more debt than many financial market sectors, which is not monetary policy at all, but an implicit fiscal policy cloaked in monetary guise. Abandon old stereotypes—don't think that replacing Powell with Trump’s people will immediately bring a flood of cheap dollars.
Warsh's policy stance is essentially a "regime change," prioritizing markets and growth, with the core method being violent balance sheet reduction. Pull the plug on the printing press, truly slim down that damned $6.7 trillion balance sheet. This means the Fed will sell大量 long-term government bonds and mortgage-backed securities. Bond prices and yields are two sides of the same coin; selling trillions in bonds will inevitably cause bond prices to collapse and yields to soar. The result will be a sharp increase in borrowing costs across society. This draining of liquidity is like striking a match on a powder keg for the US stock market, which is already at its second-highest valuation in 155 years.

Trump’s low-interest drug and Wall Street’s disillusionment with balance sheet reduction
The cognitive dissonance here is absurd enough to make one slap the table. Trump ranted wildly in the media, even openly saying he would be "very disappointed" if Warsh didn't immediately cut rates below 1%. The president wants a potent dose of low-interest relief to keep the US stock market dancing in irrational prosperity. But Warsh, during the hearing, coldly stated that the president had never asked him to commit to any specific interest rate, and even if he did, he wouldn't agree. This isn't just a political act for the sake of nomination's "independence"; it's a hard clash of macroeconomic fundamentals. You can't aggressively shrink the balance sheet while keeping market interest rates pinned at 1%. No free lunch exists. Morgan Stanley's chief economist has warned that rapidly shrinking the Fed's footprint will make the financial system extremely fragile in the face of economic pressures. Even more critically, Warsh strongly opposes the Fed's use of "forward guidance" over the past decade to soothe markets. This means the Fed will no longer act as a caring old mother, pre-announcing its plans for next month, and Wall Street will lose the safety net of macro expectations, forced to run blindly in the dark. When policy transparency disappears, liquidity valves tighten, and traditional financial markets will experience long-overdue volatility. Quant funds used to trading with Powell’s lullabies in the greenhouse are about to face a cold-blooded, ruthless dealer with no mercy.
Under this logic, all assets relying on cheap credit and high leverage will be ruthlessly revalued.

The collapse of old crypto beliefs and the rise of national security narratives
Turning back to the crypto punk carnival, the situation becomes unprecedentedly bizarre. Over the past decade, the underlying logic supporting Bitcoin and the entire Web3 market valuation has been brutally simple: Fed prints money, fiat currency depreciates, and inflation-hedging digital gold skyrockets. Liquidity flooding is the most potent aphrodisiac for crypto markets. According to this old script, Warsh’s violent balance sheet reduction and liquidity drain should be the ultimate bearish signal crushing Bitcoin’s fundamentals. But capital games are never one-dimensional. The old "printing press narrative" is indeed collapsing, but crypto markets are embedding themselves into the macro framework of great power games in ways never seen before.
Recent shifts in the White House’s stance on crypto regulation, along with the undercurrents of the "Clarity Act," are sending a highly disruptive signal: cryptocurrencies are no longer just geek toys for retail to fight inflation; they are being redefined by the US government as "national security-level" strategic assets. When Warsh tries to pull the Fed out of its role as the ultimate buyer of US debt, volatility in the US Treasury market will inevitably surge. Once the traditional safe haven of sovereign debt starts to leak, global capital urgently needs a new liquidity reservoir that isn't trapped within a single central bank’s balance sheet. At this moment, a Bitcoin that gains "national security" backing at the regulatory level and is fully integrated into compliance frameworks will undergo a fundamental transformation. It will no longer be a leveraged derivative of US tech stocks but a hard currency hedge against out-of-control US fiscal policy. Wall Street’s sharks won't stop greed just because the Fed stops easing; they just need a new compliant gambling table, and a clear regulatory license is the business license for this new game.

The ultimate power transfer: retail investors always the last blood bag
The Fed’s succession appears as a power shift between two old white men in Washington, but at its core, it’s a complete rewrite of global liquidity distribution rules. Warsh’s rise signals the end of the "marriage" era where the Fed acts as both referee and player, printing money and buying bonds simultaneously. He aims to return pricing power to the market, sounding noble and aligned with the sacred laws of free markets. But don’t forget—when the real market storm hits, without the Fed’s unlimited credit card backing, the first to be shredded in the meat grinder will always be those retail traders with full leverage and eternal bull faith. For Web3 entrepreneurs and investors, this is an extremely schizophrenic era. On one hand, macro dollar liquidity is irreversibly retreating, and those copycat projects that rely on token issuance without real cash flow will instantly reveal their true nature and die without a trace once the flood of funds dries up. On the other hand, the opening of compliance channels and the support of national narratives are injecting unprecedented structural buying into core crypto blue-chip assets. It’s like being in a failing airplane cabin—some suffocate from oxygen deprivation, while others grab the only compliant parachute.
Powell’s departure took away the last tender hopes of gentle expectations management, and Warsh’s arrival signals the start of a brutal elimination contest. Stop dreaming of wealth through blind buying. In this upcoming liquidity-starved and regulation-tightening meat grinder, your only reliance will be extreme macro chip calculations and a colder-than-Wall Street scythe’s instinct. Prepare for a real winter and a blazing fire, because the Fed’s printing press might really be about to be smashed this time.