Bitcoin suffered a sharp pullback on Wednesday, giving up the crucial $80,000 support level that helped BTC rally to prices last seen earlier in the year.
The selloff comes as Congress has also confirmed a new Federal Reserve (Fed) chair—Kevin Warsh—raising expectations for how monetary policy could evolve next.
Warsh’s Confirmation
In a recent report, market expert Sam Daodu pointed to Warsh’s unusual position among Fed leaders: Daodu noted that Warsh would be the first Fed chair who owns crypto personally and has referred to Bitcoin as “the new gold for people under 40.”
But Daodu also emphasized an important counterweight. He described Warsh as one of the more hawkish voices in the Fed—particularly on the issue of quantitative easing (QE)—and said that President Trump wants Warsh to cut rates right away.
Markets, however, are not fully aligned with the political push for faster easing. After today’s hot inflation reading, trading models are pricing roughly 39% odds of a rate hike instead of cuts.
Against that backdrop, Daodu laid out multiple factors that could shape how BTC responds to Warsh’s appointment—especially since Bitcoin could move in very different directions depending on how Warsh signals policy intent.
Daodu framed it as a split between two broad paths for the Fed, both affecting the market’s expectations for the rest of 2026.
Bitcoin Risk Hinges On Two Fed Paths
In the “realistic scenario”—described as hawkish—Edward Jones economist James McCann said, “spiking inflation will leave the Fed firmly on the sidelines for his first few meetings and potentially through the rest of 2026.”
Under that view, if Warsh signals that 3.8% inflation is unacceptable and that the Fed will hold longer, Bitcoin could slip below $78,000, the level marked by the 200-day moving average (MA).
In the other scenario, Daodu said a more constructive message could emerge from Warsh’s argument that artificial intelligence (AI) productivity justifies cutting rates even with a hot Consumer Price Index (CPI) reading. If that happens, the expert says Bitcoin could rebound toward the $82,000 –$85,000 zone.
What happens at the next Federal Open Market Committee (FOMC) meeting may not be the main catalyst. Daodu noted that markets have largely already priced in that the Fed will likely do nothing at the next meeting.
CME FedWatch places the probability of a hold at the current 3.50%–3.75% rate at about 70% for June, with a 25 basis point cut priced at roughly 28%. Yet, the larger issue, according to Daodu, is whether anything Warsh says changes the expected rate path further out.
Revised Dot Plot Vs. Surprise Cut
According to Daodu, two outcomes could move BTC. One is a surprise cut scenario that is still priced at about 28% odds. If that materializes, Daodu said Bitcoin could surge toward $85,000 –$88,000, with the implication that Warsh would be cutting rates without waiting for inflation to cool.
The second outcome involves hawkish messaging combined with a revised dot plot. Daodu said the June meeting includes an updated Summary of Economic Projections and its associated dot plot, which shows where each Fed member expects rates to land.
If Fed officials shift the dot plot toward fewer cuts for 2026, Bitcoin could fall below $78,000. Daodu described this as riskier because it could lock in tighter policy expectations regardless of Warsh’s personal preferences.
Featured image created with OpenArt, chart from TradingView.com
