Bitcoin collapsed to a nine-month low. What does Trump's favorite to head the Fed have to do with it?

Bitcoin fell to a nine-month low of $81 thousand, triggering the liquidation of positions for more than a billion dollars in a day. Investors in search of refuge from geopolitical uncertainty are abandoning cryptocurrencies in favor of traditional protective assets. The news about the winner of the race for the post of Fed Chairman also played its role in the crypto market sell-off.

According to TradingView, at the beginning of trading on January 30, the bitcoin rate on Coinbase exchange dropped to $81058 - the lowest level since April 2025. Statistics on the CoinGlass website show that over the past 24 hours, crypto traders around the world closed positions worth $1.69 billion. The vast majority of liquidations - 93% - were longs, mostly in bitcoin and Ethereum. The massive collapse of the crypto market in the last 24 hours has reduced its total capitalization by $200 billion, according to Cointelegraph.

Bitcoin's weakness contrasts with the rising prices of gold and other precious metals amid investors' flight to conservative instruments. This casts doubt on claims that the cryptocurrency functions as "digital gold," Bloomberg writes. "Suddenly, cryptocurrencies no longer look like an alternative to fiat money and a hedge against the not-so-responsible financial policies of major countries," the agency quoted FxPro analyst Alex Kupcikiewicz as saying.

"I wouldn't be shocked to see bitcoin trading in the $70000 range anytime soon," said Kaiko analyst Adam McCarthy (quoted by Bloomberg). If the price falls below $80000 on Friday, Jan. 30, "the decline could continue into the weekend, and given the low liquidity on days like that, it could have an outsized impact," he warned.

Concerns in the crypto market may have intensified following news that US President Donald Trump is preparing to nominate financier Kevin Warsh, who served on the Fed's Board of Governors from 2006 to 2011, as chairman of the Federal Reserve on January 30. "Kevin Warsh has been a monetary policy hawk his entire career and, more importantly, [remained so] at a time when the labor market collapsed. His current dovish rhetoric is dictated [only] by considerations of convenience," analysts at Renaissance Macro Research wrote on social media X.

Markets generally view Warsh's increased influence as a negative for bitcoin, Markus Thielen, founder of analytics platform 10x Research, told CoinDesk. "His emphasis on monetary discipline, higher real rates (the actual cost of borrowing adjusted for inflation - Oninvest) and reduced liquidity exposes the cryptocurrency not as a hedge against [money] depreciation, but as a speculative excess that comes to naught when easy money is withdrawn from circulation," the expert said.

This article was AI-translated and verified by a human editor