Kevin Warsh's appointment sparks meme-level panic: Why does the market despise this Fed nominee?

When Trump announced the nomination of Kevin Warsh as Federal Reserve Chair, the cryptocurrency market experienced a meme-worthy collective panic—but this disdain may be based on misconceptions. What was the market’s initial reaction? Gold and silver plummeted, Bitcoin crashed from $90,400 to $81,000. Many began to dismiss Warsh, viewing him as a Trojan horse sent by Wall Street to destroy cryptocurrencies.

Price Crash Shocks the Market: Gold, Silver, and Bitcoin’s Collective Decline

As the news broke, silver instantly dropped 30%, gold fell over 10%, and Bitcoin experienced a rapid nearly 10% decline. This wave of panic reflected a stereotypical perception of Warsh’s identity. After all, many still remember his hawkish stance during the 2008 financial crisis—warning of inflation risks even as unemployment soared. Worse, he publicly disparaged cryptocurrencies as “software pretending to be money” and strongly promoted CBDCs (central bank digital currencies), which in the eyes of crypto purists is akin to a death sentence. These are the meme-like reasons fueling the market’s collective disdain.

From Hawk to Crypto Supporter: How Warsh’s Dual Identity Is Misunderstood

But the reality is far more complex than the surface story. Warsh is not an enemy of cryptocurrencies; rather, he criticizes “speculative crypto”—a completely different stance. He was an early investor in Bitwise, a pioneer in compliant crypto funds. He invested in Basis, an algorithmic stablecoin project, and has served as an advisor to Electric Capital. In a 2015 conversation with renowned hedge fund manager Druckenmiller, he clearly stated: “Blockchain technology will enable us to do things previously impossible.” These facts show that Warsh is not a crypto despiser but a tech believer.

Portfolio Truths: The Hidden Crypto Beliefs Behind Bitwise and Basis

Warsh’s investment record tells a different story. His crypto positioning is deliberate, not casual. Bitwise represents a compliant, institutional approach, while Basis reflects confidence in stablecoin technology. His advisory role at Electric Capital further confirms his genuine view of the crypto ecosystem. He believes in the power of technology but is disdainful of bubbles. In other words, he’s not opposed to crypto itself but to the meme-like speculation often mistaken for money.

Interest Rate Policy Shift and Liquidity Reallocation: Different Impacts on ETH and Meme Coins

The key lies in Warsh’s policy orientation. He sees artificial intelligence as a “massive deflationary force,” which suggests he might push for more aggressive rate cuts and balance sheet reduction than Powell. But this isn’t about liquidity disappearing; it’s about reallocation—from leveraged speculation to assets with real cash flows. This shift could benefit projects like Ethereum with actual utility, but pose survival challenges for meme coins that are purely speculative.

So, what’s truly worth contemplating isn’t disdain for Warsh but understanding the policy shift he represents. The market’s initial meme-level reaction was based on misunderstanding, but deeper analysis reveals that this former Fed official’s true stance is more conducive to the long-term healthy development of the crypto ecosystem.