Crypto: Trump's Fed Nomination A ‘mixed’ Signal For Bitcoin, Us Liquidity:...

Warsh’s nomination as the new Fed chair has ignited US liquidity drought concerns, but his interest rate policy may hold the silver lining for risk asset recovery, according to market analysts.

US President Donald Trump has nominated former Federal Reserve governor Kevin Warsh to lead the US central bank, a move that has sent mixed signals for cryptocurrency markets and US dollar liquidity, according to market analysts.

Trump nominated Bitcoin-friendly Warsh on Friday, and he is set to replace Jerome Powell when his term ends in May, assuming the Senate approves him.

Warsh's nomination could mean the Fed will continue its interest rate cut trajectory. But according to Thomas Perfumo, a global economist at cryptocurrency exchange Kraken, it also signals that broader market liquidity is expected to “stabilize rather than meaningfully expand.”

However, investors may be disappointed with Warsh’s “skeptical posture on balance sheet expansion,” explained Perfumo, which includes measures like quantitative easing — a shift that involves bond-buying to lower borrowing costs and stimulate economic activity.

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The comments come shortly after cryptocurrency markets lost $250 billion in market capitalization over the weekend, as part of a wider sell-off impacting stock markets and precious metals.

Popular analyst Raoul Pal pointed to the US liquidity drought as the main reason behind the crypto and equities crash, rather than crypto-specific events, Cointelegraph reported earlier on Monday.

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Warsh’s nomination ignited liquidity concerns among investors, becoming the main reason for the crash in crypto, stocks and precious metals, according to Nic Puckrin, investment analyst and co-founder of educational platform Coin Bureau.

Source: CoinTelegraph