On the evening of February 1, Bitcoin’s price took a sharp dive, briefly hitting $75,892. The sell-off was likely triggered by news from the White House: U.S. President Donald Trump nominated Kevin Warsh to replace current Fed Chair Jerome Powell. The market immediately priced in the risks of a regulatory policy shift.
Traders view Warsh’s appointment as a direct threat to liquidity. While he has previously spoken complimentarily about Bitcoin, his macroeconomic views outweigh that optimism. Warsh is considered a hardline hawk: he advocates for fiscal restraint, curbing inflation at any cost, and exiting the quantitative easing program. For risk assets, the winding down of stimulus is always a negative signal.
Gold and silver, which had been hitting new all-time highs for months, saw double-digit percentage declines following Trump’s announcement. The S&P 500 index also failed to hold its ground, losing approximately 0.43%. Traders preferred to lock in profits amidst the uncertainty.
Sentiment in the crypto community soured instantly. On Sunday, February 1, the Fear and Greed Index plunged six points, dropping to 14 out of 100. This is the lowest reading in over a month, signaling extreme anxiety among traders.
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