Unprecedented! The new Federal Reserve Chair only needs 9 more votes to pass, the rate cut cycle is dead, do you still dare to hold your $BTC and $ETH?

Bro, sit tight. Let me tell you about something that just happened — the voting results in the U.S. Senate, it’s like dancing on the edge of a knife.

Yesterday, Wednesday Eastern Time, the full Senate voted to officially confirm Kevin Warsh, a former Federal Reserve Board member, as the new Fed Chair. The vote was 54 in favor and 45 against, a margin of just 9 votes. These 9 votes represent the narrowest margin since 1977 when Fed Chair nominations required Senate confirmation.

Guess what? It was almost entirely along party lines — 53 Republicans supported, with only Pennsylvania Senator John Fetterman crossing the aisle. Compared to back then, the gap is glaring: Powell was confirmed with over 80 votes twice; Yellen in 2014 also had 56 in favor and 26 against. So, is this vote really about choosing a central bank chief, or is it a political showdown?

Even more alarming is the market’s reaction today. Nick Timiraos, known as the “New Federal Reserve News Agency,” said: Wednesday’s market strongly implied that the rate-cutting cycle for 2024-2025 is over. The two-year U.S. Treasury yield shot up to its highest since June last year — and last June, the Fed’s policy rate was 75 basis points higher than now. The message, in plain language, is: the market doesn’t expect short-term rates to fall anymore, and they might even go up.

Why was Warsh so difficult to confirm? Because Trump wanted to cut rates, but inflation wouldn’t cooperate. This week, April’s CPI rose 3.8% year-over-year, and PPI increased 6% — the largest gains in nearly three years and over three years, respectively. Middle East tensions and oil prices in the Strait of Hormuz are adding fuel to the fire. Warsh said at the hearing he hadn’t made any promises to Trump and would keep the Fed independent — but Democrats don’t believe him, and neither does the market.

Don’t forget, Warsh was originally a hawk. He served as a Fed governor from 2006 to 2011, participated in key decisions during the financial crisis, then worked at the Drukenmiller family office and the Hoover Institution at Stanford. He’s long criticized Powell’s ultra-loose policies post-pandemic, saying they directly fueled inflation. But now, he’s suddenly become moderate — which makes people more cautious: is he trying to curry favor with the White House?

Although Powell has stepped down as Chair, he remains a Fed governor. This means that for the foreseeable future, there will be two very different voices inside the Fed. Warsh’s first big test will be the FOMC meeting on June 16-17. Whether he leans toward “political compromise” or “central bank independence” will determine the future direction of dollar liquidity over the next few years.

For our holdings in $BTC and $ETH, this means one thing: the crypto bull market driven by rate cuts in 2019-2021 now has a shaky foundation. If the Fed even kills expectations of rate cuts, risk asset valuations will have to be re-priced. The real bottom for $BTC has never been about exchange order walls, but about global liquidity.

That’s all for now. Think carefully about your positions.

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