Crypto Crash Today: Is Kevin Warsh Good for Bitcoin (BTC)?

The markets are reeling today after President Donald Trump revealed who he will appoint as the future head of the Federal Reserve. Bitcoin (BTC) is tumbling by nearly 6% after the head of state ushered in the name Kevin Warsh, causing cascade liquidations exceeding $1.2 billion.

Total Crypto Liquidations – Source: CoinGlass

President Trump is definitely getting better at crashing the markets every now and then, and has become traders’ most pressing concern.

Everybody is getting used to tiptoe in their positions whenever he prepares to talk. The problem is, he doesn’t always give the market a heads up.

Gold and silver have crashed as well, with staggering single-day losses of 10% and 30% respectively.

Who is Kevin Warsh and Why Should Cryptos Care?

Market participants fear that Warsh might not be as “moderate” as the Fed’s long-tenured current Chairman, Jerome Powell.

In addition, growing concerns of a “politicized” Fed may have been responsible for pushing asset prices to lower levels, as Warsh was, at some point, on Trump’s list of potential candidates for the Treasury Department.

Trump’s increasingly hostile rhetoric against Powell signaled that he won’t reappoint the Fed’s current leader, primarily because he has been reluctant to lower interest rates any further despite the President’s continuous pressure.

That said, Warsh is no wild card. He became the youngest Fed governor at 35 and served right next to Ben Bernanke. He advised Bernanke during the 2008 financial crisis and knows the ins and outs of the U.S. financial markets like few.

Warsh is considered pro-crypto. He was quoted in a conversation with Stanley Druckenmiller, a successful American investor, saying: “[Bitcoin] It’s just the newest, coolest software that will provide us the opportunity to do things we could never have done before.”

In any case, whether he is a pro-crypto figure or not doesn’t really matter, as the Fed does not deal with specific asset classes.

What the market seems to be reacting to is an unexpected change in a key leadership role that will shape the future of the country’s financial system for many years. Sell first, analyze later.

Sell Signals Stack Up in the 4H Chart – $74K Next?

Trading volumes for BTC have gone up by 20% in the past 24 hours, climbing to 4% of the asset’s circulating market. Surprisingly, today is still not at all one of the worst days that traders have faced lately.

With $1.2 billion in long positions being wiped out in a matter of minutes, today’s mini flash crash does not make it to the top of the crypto market’s worst days.

BTC/USD 4H Chart (Binance) – Source: TradingView

Sell signals have been stacking up in the 4-hour chart. Yesterday, we warned that a bear flag pattern had been confirmed. Our bearish target for BTC at the time is $74,000, meaning a 12% downside risk.

The sell-off accelerated as the price dropped below a price channel that was starting to form in this lower time frame. Now, BTC is heading to retest the lower bound of this setup. A rejection of this line will likely confirm that the token is heading to lower lows.

The top crypto seems to have encountered strong support at its November 21 lows of $81,000, making this a short-term target if bearish momentum resumes.

That said, the Relative Strength Index (RSI) just hit oversold, increasing the odds of a technical bounce. Interestingly, a bullish divergence has popped up, also favoring a potential reversal.

However, the baseline scenario remains bearish as the market may need more time to adjust its scenarios to the latest news. Sellers will keep selling until they think it’s cheap.

So, buckle up. This could be an ugly ride.