Even if Kevin Warsh is now the chairman of the Federal Reserve, Bitcoin has been under pressure below $78,000 because traders are still concentrating on increasing Treasury rates and the low likelihood of short-term rate reduction.
Bitcoin and Risk Assets Remain Under Strain
Less than 24 hours after being inaugurated in as the new head of the Federal Reserve, Warsh—who has previously spoken out in favor of Bitcoin and against digital currencies issued by central banks—suffered a fall. Bond markets also saw a sudden shift that some predicted may be bad news for risk assets like cryptocurrency. At the time of writing, Bitcoin is trading at $77,498, up 0.24% in the last 24 hours as per data from CMC.
In spite of the Federal Reserve’s target rate being between 3.50% to 3.75%, the 2-year US Treasury yield rose to 4.14%, its highest level since February 2025. The 2-year yield is a good indicator of market sentiment about future monetary policy, thus traders saw this change as evidence that Warsh is moving away from aggressive easing.
According to CME FedWatch data, futures markets are bracing for a 25-basis-point rate rise by December, with rates expected to stay mostly stable for the most of 2026.
In response to market expectations of impending tighter monetary policy, the Federal Reserve has historically increased rates on many occasions when the 2-year Treasury yield surpassed the federal funds rate, according to historical data provided by BCA Research.
Yields that fell below the Fed funds rate in prior cycles often indicated that people were expecting the Fed to ease policy in the near future. Since increased borrowing costs and greater actual returns on government debt might diminish demand for speculative assets, higher yields tend to undermine Bitcoin’s liquidity-driven narrative.
For all the praise Warsh has received for his views on financial innovation and CBDCs, experts have cautioned that digital assets might still face challenges from his legislative approach.
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