Bitcoin Slides Despite Warsh Fed Pick as ETF Redemptions Weigh on Sentiment

Bitcoin traded near its weakest levels in two months on Friday after U.S. President Donald Trump nominated Kevin Warsh as the next chair of the Federal Reserve, a decision that did little to steady a crypto market already under pressure from persistent ETF outflows and a broader risk-off mood.

The largest cryptocurrency fell as much as 4% to $81,045 — its lowest level since November — before paring losses to trade around $83,651. 

BTC price (Source: CoinGecko)

While some traders had positioned for a relief rally tied to a potential shift in monetary policy leadership, the announcement instead reinforced uncertainty about the future policy path.

Warsh Nomination Adds Policy Uncertainty

Warsh, who previously served as a Federal Reserve governor, has recently aligned himself with Trump’s calls for lower interest rates, raising expectations among some market participants that his appointment could eventually support risk assets. 

However, his background as a traditional policymaker with a historically cautious stance on inflation has complicated that narrative.

Crypto investors remain unsure whether Warsh would pursue aggressive easing once in office or revert to a more conservative approach if inflation risks re-emerge. That ambiguity weighed on sentiment as traders reassessed the likelihood of near-term policy support for digital assets.

Risk-Off Mood Spreads Across Markets

The Warsh announcement landed against a backdrop of broad market caution. U.S. equities slipped, and the dollar hovered near four-year lows, reflecting unease over global growth and policy direction. Bitcoin, often treated as a high-beta risk asset during periods of stress, moved in tandem with the wider selloff.

The latest decline leaves Bitcoin down more than 30% from its October peak, reinforcing the sense that momentum has decisively shifted. 

ETF Outflows Continue to Pressure Prices

Spot Bitcoin exchange-traded funds remain a key drag on market sentiment. 

The 12 U.S.-listed products have now recorded three consecutive months of net redemptions — the longest sustained outflow streak since their launch in 2024. If the trend persists through the end of January, more than $5.7 billion will have been pulled from the funds over that period, according to Farside Investors data.

Recent U.S. spot BTC ETF flows (Source: Farside Investors)

The sustained withdrawals suggest institutional investors remain cautious, even as Bitcoin prices have corrected sharply from last year’s highs. For many traders, the lack of consistent ETF inflows undermines hopes for a quick recovery.

Bitcoin Lags Gold as Safe-Haven Narrative Weakens

Bitcoin’s recent weakness has stood in stark contrast to the rally in gold and other precious metals. As geopolitical tensions and macro uncertainty drive investors toward traditional safe havens, cryptocurrencies have largely been left out of the trade.

That divergence has reignited debate over Bitcoin’s long-standing “digital gold” narrative. 

Fund flows underscore the shift. BlackRock’s iShares Bitcoin Trust, once the most successful ETF launch in history, has now fallen behind BlackRock’s gold ETF in total assets under management.

Mixed Signals Emerge From Market Participants

Not all developments have been negative. Binance this week announced that its emergency insurance reserve fund, SAFU, will convert roughly $1 billion in stablecoin holdings into Bitcoin over the next 30 days, making the fund fully Bitcoin-denominated. The move was framed as a long-term vote of confidence in the asset.

Short-term price expectations remain divided. “Crypto sold off with the tech move,” said Jake Ostrovskis, head of over-the-counter trading at Wintermute. “For Bitcoin, buyers are showing up around current levels. That is keeping Bitcoin between roughly $85,000 and $90,000 into the upcoming options expiry.”

Others see downside risks dominating. Adam McCarthy, a research analyst at Kaiko, warned that a break below $80,000 could accelerate losses, particularly over the weekend when liquidity tends to thin.

“I wouldn’t be shocked to see BTC trade in the $70,000 range soon,” he said.