Bitcoin is trading around $63,000 ahead of the expected change of chairman at the US Federal Reserve in May 2026. Jerome Powell’s preparations to hand over his duties to Kevin Warsh brought historical similarities to the agenda again, along with the weak outlook in the crypto market.
There were sharp declines in previous transitions
While stock markets remain close to record levels, it is noteworthy that Bitcoin remains approximately 50% below its peak of $ 125,000. One of the prominent evaluations in the market is that Fed presidential transitions have coincided with sharp retreats in Bitcoin in the past.
According to data, Bitcoin fell nearly 83% after Janet Yellen took office in 2014. There was a decline of approximately 84% after 2018, when Jerome Powell’s first term began. The loss after Powell’s reappointment in 2022 was also recorded as 77%.
The fact that the new Fed presidents took a tough stance on the fight against inflation in the first periods of their duties and that the markets priced this in advance are among the main factors that can put pressure on risky assets.
According to the evaluations reported by MacroMicro, this picture is explained by a few common elements. When a new president takes office, institutional investors may reduce their positions in volatile assets until policy direction becomes clear. In addition, tighter messages from presidents to reassure against inflation may complicate liquidity conditions.
Market expectations can also magnify this effect. The possibility of tightening is often reflected in prices before official decisions are made. Subsequent external shocks can also increase the existing pressure. In 2014 Mt. Gox collapse, the dissolution of the ICO market in 2018, and the crises caused by Terra and FTX in 2022 coincided with the periods when the Fed tightened.
Why might this cycle be different?
However, there are also elements that indicate that the current transition process may differ from previous examples. The Fed ended quantitative tightening in December 2025 and resumed purchases of short-term US Treasury bonds. This change may contribute to keeping basic liquidity conditions more balanced compared to the 2018 and 2022 periods.
Mini dictionary: Quantitative tightening means that the central bank shrinks its balance sheet and withdraws excess liquidity from the market. FOMC is the Federal Open Market Committee that determines the Fed’s interest rate decisions and monetary policy steps.
The research stated that the risk of a liquidity-driven Bitcoin sales wave, such as seen in previous presidential changes, may be more limited this time. A more stable liquidity backdrop indicates that one of the primary factors that turned downturns into long-running bear markets in the past has weakened.
All eyes on the signals Warsh will give
Still, uncertainty remains about what kind of policy Kevin Warsh will follow. Warsh stands out as a name known for his statements close to a tighter monetary policy line in the past. Re-strengthening inflation signals also increase comments that the dovish messages expected by some market participants may not come at the FOMC meeting in June.
The news also stated that US President Donald Trump’s pressure on Warsh to support interest rate cuts added another layer of uncertainty to the process. Therefore, it is considered that investors should focus on the actual policy direction of the new president and not just on similarities in the past.
It is stated that the decisive factor in the coming period will be whether the Fed will follow a more supportive or more restrictive line in the new period. Whether Bitcoin can break the pattern seen in previous presidential changes will largely depend on the outcome of these choices.
