Bitcoin fell sharply on Saturday, January 31, dropping about 7% from roughly $84,600 to $78,700 after President Donald Trump nominated former Federal Reserve governor Kevin Warsh to become the next Chair of the Federal Reserve. The move wiped out about $2.4 billion in long positions, the largest crypto liquidation event of the year to date.
A hawkish week for crypto
The nomination, made official on Friday, January 30, capped a difficult stretch. At its January 27–28 meeting the Fed held its policy rate in the 3.50%–3.75% range and signalled it intends to stay the course in 2026. Bitcoin slid from about $90,400 to roughly $83,400 in the 48 hours after that decision, before the Warsh news pushed it lower again.
Why markets reacted
Traders had hoped a new Fed chair would lean toward faster rate cuts. Warsh, however, is associated with monetary discipline, higher real rates and an aggressive reduction of the Fed's balance sheet. In that framing, crypto looks less like a hedge against currency debasement and more like a speculative asset that suffers when liquidity is withdrawn — which is exactly how the market traded it.
January in context
- BTC opened the year with a rally toward $97,000
- By month-end, bitcoin was down about 4.8% for January and ether about 9%
- Macro uncertainty and stretched valuations in both equities and crypto weighed on sentiment
Warsh still needs Senate confirmation. Until his policy stance becomes clearer, rate expectations are likely to remain the single biggest driver of crypto prices.
