The cryptocurrency market faced a fresh wave of selling over the weekend, with Bitcoin breaking below the $80,000 mark to hit its lowest level since April of last year, extending a month-long downtrend. This sell-off, triggered by Trump's nomination of Warsh for Fed Chair, has not only battered cryptocurrencies but also reversed the upward momentum of gold and silver, as market bets on dollar devaluation are unraveling.
Amid thin liquidity and limited buying interest, Bitcoin's decline accelerated on Saturday, at one point falling 10% to touch a low of $75,709.88. Other major tokens like Ethereum and Solana experienced even more severe drops, falling 17% and over 17% respectively. According to data from CoinGecko, the total market value of the cryptocurrency sector evaporated approximately $111 billion in the past 24 hours.
This decline occurred against a backdrop of scarce liquidity and tepid buyer interest, pushing the losses for the world's largest cryptocurrency to over 30%. Data from market tracker Coinglass showed that around $1.6 billion in long and short positions were liquidated during the same period, with the majority occurring in the final four hours and concentrated in Bitcoin and Ethereum.
The news of President Trump's nomination of Warsh to be the next Federal Reserve Chair appears to have exacerbated the cryptocurrency sell-off. As previously discussed, former Goldman Sachs executive Gavyn Davies suggested that choosing Warsh reduces the risk of a crisis triggered by a "Sell America" trade, as he is widely expected to be staunchly anti-inflation.
The scale of liquidations expanded while retail interest remained weak. Data from market tracker Coinglass indicated that approximately $1.6 billion in long and short positions were liquidated in the past 24 hours, with the bulk happening in the final four hours, primarily focused on Bitcoin and Ethereum.
After closing at $83,817 on Friday, Bitcoin had fallen to $78,092 by Saturday evening, a drop of 7%. This downward move brought prices back to levels last seen after April 2025, continuing a pattern of macro-level disappointment over recent weeks.
Needham analyst John Todaro stated, "Current levels indicate extremely weak interest from retail investors," adding that trading volumes could remain subdued for "the next one or two quarters." Persistent outflows from spot ETFs further corroborate the fading investor appetite.
The failure of its safe-haven attributes has made gold and silver the preferred alternatives. Davies, a former chief economist and partner at Goldman Sachs Group, suggested that Warsh's policy mix might be welcomed by market participants, though his desire to reduce the Fed's role in markets implies he may be less inclined to intervene during stock market turmoil. "Many market observers would like this combination—a smaller balance sheet alongside a more deregulated banking system."
Gavyn Davies, co-founder and chairman of Fulcrum Asset Management and head of the London office, said in a video posted on the firm's website:
"The markets, including the dollar, would breathe a significant sigh of relief. Choosing Warsh reduces the risk of that truly crisis-inducing 'Sell America' trade."
Despite the dollar weakening for much of January and growing investor wariness over Trump administration policy risks, this shift failed to boost cryptocurrency market sentiment. Similarly, Bitcoin failed to mount a meaningful response even as gold prices surged to record highs.
Louis Navellier of Navellier & Associates stated, "Silver and gold have become the vehicles for investors worried about fiat currency." Following a sharp pullback in gold and silver on Friday, Bitcoin still failed to attract inflows. Traditional safe-haven flows remain concentrated in metals and cash.
This absence of buying interest highlights the dilemma surrounding Bitcoin's role in a broader investment portfolio. Geopolitical risks have failed to spur demand, and Bitcoin's former dual identity as both a momentum trade and a hedge against currency devaluation is now challenged on both fronts.
Bitcoin's price may also be affected by escalating tensions between Israel and Iran. According to reports, Trump stated that the US and Iran are negotiating, with an advisor to Iran's Supreme Leader indicating that a "negotiation framework" is taking shape. Earlier on January 31st, social media was rife with unverified rumors about the assassination of a commander of Iran's Islamic Revolutionary Guard Corps Navy, drone attacks on a naval base, and explosions in multiple locations. Iranian media subsequently debunked these claims one by one, stating they were untrue.
Furthermore, delays in new market structure regulations for the US crypto industry have dampened interest in digital assets. The market had anticipated that regulatory clarity would boost confidence, but a Senate committee's shift in focus to housing issues has led to a postponement of cryptocurrency legislation.
It is noteworthy that although Warsh has previously called Bitcoin a "good asset" and a "good police of policy," his nomination appears to have reversed the strong rallies seen in gold, silver, and cryptocurrencies. Markets expect that Warsh may seek to reduce the Federal Reserve's role in markets, implying he might be less willing to intervene during periods of stock market volatility.
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