Bitcoin price and the crypto market sank on Friday morning after Donald Trump announced that he will deliver his Federal Reserve pick later today, with traders on Polymarket betting on Kevin Warsh.
Kevin Warsh odds are soaring
Traders on Polymarket and Kalshi are betting that Donald Trump will nominate Kevin Warsh to be the next Federal Reserve Chair.
Data on Polymarket shows that the odds of Warsh have jumped to 92%, while Rick Rieder’s probability has dropped to 6%.
Similarly, the same is happening on Polymarket, where the odds have jumped to 91%, the highest level on record.
The odds jumped after Reuters reported that Trump had met with Warsh on Thursday and was left impressed with him.
Therefore, the most likely situation is where Trump will appoint Warsh, a former Federal Reserve official, to become the next chair. Warsh has historically voiced his opposition to cryptocurrencies, citing its volatility.
Still, historically, the Federal Reserve has had no major role in the crypto industry. Its impact on the crypto industry has been mostly on monetary policy.
In most cases, Bitcoin and the broader crypto market does well when the Fed is cutting interest rates and embracing other policies like quantitative easing policies, as happened in the pandemic. Any Fed official that Trump will nominate will likely be supportive of interest rate cuts.
The challenge, however, is that the Fed Chair does not make the decision by himself. The Federal Open Market Committee (FOMC) is made up of 12 voting members. Therefore, Governor Warsh will need to convince the other Fed officials to cut rates as Trump has proposed.
Rising geopolitical risks
Bitcoin price is also struggling as geopolitical risks in the Middle East rise. In a statement on Wednesday. Trump threatened that he would attack Iran using the armada he has amassed in the region.
The rising geopolitical risks explain why crude oil prices and gold have jumped in the past few months. Brent has jumped to over $70 a barrel, while gold has been in a strong uptrend.
Iran has threatened to retaliate if attacked. Its options will be to shut the Strait of Hormuz, a move that would lead to higher crude oil prices. It would also attack Israel and US bases in the Middle East.
Meanwhile, data shows that spot Bitcoin ETF outflows have remained this week. These funds shed over $19 million in inflows on Wednesday, bringing the year-to-date outflows to over $278 million. These funds shed over $1.09 billion in December and $3.4 billion in November.
Bitcoin price technical analysis
The weekly timeframe chart shows that the Bitcoin price has crashed in the past few weeks. It has plunged from the all-time high of $126,200 to the current $82,000.
Bitcoin has moved below the 38.2% Fibonacci Retracement level at $83,150. Additionally, the coin has moved below the 50-week Exponential Moving Average (EMA). It has moved below the Ichimoku cloud and the Supertrend indicator.
The coin has also formed a bearish flag pattern and has moved below the lower side. This flag pattern formed after the coin formed a bearish flag pattern, a common risky pattern.
Therefore, the coin will likely continue falling as sellers target the key support level at $74,000. This target is along the 50% Fibonacci Retracement level.
The post Bitcoin price sinks as Kevin Warsh Fed Chair odds surge on Kalshi, Polymarket appeared first on Invezz