Bitcoin Drops 2% as Fed Divisions Signal Policy Uncertainty Under Warsh

Bitcoin slipped 2% to $75,000 on Wednesday following Jerome Powell’s final press conference as Federal Reserve chair, as internal divisions at the central bank rattled markets. Traders grappled with an unusually split Fed decision to maintain interest rates and the looming risk of policy conflict under incoming chair Kevin Warsh.

In a note shared with DL News, Kraken’s chief economist Thomas Perfumo highlighted the lack of a clear transition to Warsh, who is nearing Senate confirmation as Fed chair. “The absence of a clean handoff to Warsh suggests the potential for discord over policy at the Fed,” Perfumo stated.

The pullback in Bitcoin coincides with traders pricing in a 90% chance that the Fed will hold rates steady through year-end. This messy transition, rather than a smooth handoff, is emerging as a negative factor for crypto and other growth assets.

Perfumo added: “The vote itself was a loud crack in the Powell-era consensus, with four dissents—the most on a single decision since October 1992.” Three officials dissented over what they viewed as an “easing bias” in the central bank’s policy.

Warsh has pledged to cut rates quickly, but Powell emphasized that inflation risks remain elevated, particularly as Brent crude still trades above $100 per barrel amid stalled US-Iran negotiations. The tension became evident in the crypto exchange-traded fund (ETF) market, where traders withdrew $138 million from spot Bitcoin ETFs following the meeting, according to DefiLlama data. This reversed part of April’s recovery.

Despite the recent decline, April has been the best month for Bitcoin ETFs since October, with traders pouring nearly $2 billion into these funds this month.

Powell’s Extended Role Complicates Fed Transition

The Fed’s split decision exposed a central bank no longer unified as Powell prepares to step down as chair on May 15. Perfumo noted: “Powell’s indication that he’ll stay on as a board governor past his term as chair, albeit with a low profile, complicates the balance of power.”

Powell confirmed at his press conference that he intends to remain a voting member of the Fed’s Board of Governors after his term as chair ends—a decision with little precedent, as outgoing chairs typically leave the institution.

Meanwhile, Warsh, President Donald Trump’s nominee to replace Powell, cleared the Senate Banking Committee on Wednesday. A final confirmation vote is expected soon.

Powell insisted he has no desire to act as a “shadow chair,” yet his continued presence as a voting governor could limit Warsh’s ability to reshape the institution. Powell, originally appointed by Trump during his first term, has clashed with the president for months over interest rates. Earlier in April, Trump threatened to fire Powell if he did not leave office peacefully.

Powell stated: “I had long planned to retire. The things that have happened in the last three months have left me no choice but to stay.”

Crypto Market Movements

• Bitcoin: Down 1.6% over the past 24 hours, trading at $75,731.
• Ethereum: Down 3.1% over the past few hours, trading at $2,251.

Further Reading

• Senators advance Warsh nomination after DOJ drops Fed chair probe — DL News
• Banks are fighting a ‘sideshow’ as Clarity Act stalls. Will it matter? — DL News
• New Bitcoin Wallet