#Gate广场五月交易分享

‍# William confirmed as Federal Reserve Chair
The Federal Reserve will welcome a new leader! What is the potential impact on the crypto market?

On May 12th, the U.S. Senate officially confirmed Kevin Warsh as the new Chair of the Federal Reserve with 51 votes in favor and 45 against, succeeding Jerome Powell whose term ends on May 15th. What are the main policy tendencies of this new Fed chief? How might his appointment affect the crypto space? Let’s hear what Xiao Caishen has to say.

I. Brief Biography

Kevin Warsh is a former Federal Reserve Board member, currently a visiting scholar at Stanford University’s Hoover Institution. He holds a J.D. from Harvard Law School and a Bachelor’s degree in Public Policy from Stanford University. He was the youngest Federal Reserve Board member in history (at age 35). Early in his career, he worked in M&A at Morgan Stanley, served as Special Assistant to the President for Economic Policy under the George W. Bush administration from 2002 to 2006, joined the Fed in 2006, and resigned in 2011 in opposition to the second round of quantitative easing (QE).

II. Main Policy Positions

Warsh’s policy stance centers on “practical monetarism,” advocating for aggressive quantitative tightening (QT) to reduce the Fed’s balance sheet and suppress inflation expectations, thereby creating room for “safe rate cuts.” He responds to the Trump administration’s calls for rate cuts but emphasizes the independence of the central bank, attempting to balance political pressure with monetary policy credibility through a technical approach.

III. Potential Impact on the Cryptocurrency Market

‌1. Short-term bearish, possible structural opportunities in the medium to long term‌

Warsh’s “balance sheet reduction + rate cuts” policy combination will initially reinforce tightening expectations, with markets worried about liquidity withdrawal, potentially pressuring risk assets including cryptocurrencies. After the announcement, the 10-year U.S. Treasury yield rose rapidly, the dollar strengthened, gold and U.S. stocks declined together, and the crypto market may also see a short-term correction.

‌2. Rate cut expectations open up liquidity imagination‌

If inflation is controlled, and the Fed begins a rate-cut cycle, it will signal long-term easing. Historically, rate-cut cycles often coincide with asset bubbles expanding. Bitcoin, as a “high risk, high return” asset, may see capital inflows in the mid to late stages. If Warsh successfully switches from “tightening first, then easing,” it could lay a new foundation for crypto market rallies.

‌3. Policy uncertainty increases market volatility‌

“Balance sheet reduction + rate cuts” is an uncommon combination, and the effects of the two may counteract each other. QT suppresses liquidity, while rate cuts stimulate the economy, making market pricing unclear. This policy ambiguity will increase crypto volatility, offering trading opportunities for speculators but also raising holding risks.

‌4. Regulatory stance remains unclear, but independence may benefit the industry‌

Warsh emphasizes the Fed’s “independence earned through self-reliance,” indicating a focus on institutional credibility. If he continues a technocratic style, he may avoid direct intervention in crypto regulation, which could benefit industry stability. However, if the Trump administration pressures him to coordinate fiscal deficit monetization, it could trigger concerns about “Fed being politicized,” potentially boosting Bitcoin’s “censorship resistance” demand.

Summary: Due to its short-term balance sheet reduction policy, Warsh’s appointment may initially be bearish for Bitcoin. However, since the market has already somewhat digested this news, it is unlikely to cause significant pressure. In the long run, his advocacy for rate cuts could be positive for digital currencies.