Powell insists he won’t be a “shadow chair.”
Markets aren’t liking the uncertainty.
Bitcoin stumbled after Jerome Powell’s final presser at the helm of the Federal Reserve on Wednesday, sliding 2% to $75,000 as cracks inside the central bank rattled markets.
Traders digested an unusually divided Fed decision to hold rates and the prospect of policy conflict under incoming chair Kevin Warsh, Kraken’s chief economist Thomas Perfumo said in a note shared with DL News.
“The absence of a clean handoff to Warsh, who is nearing Senate confirmation as chair, suggests the potential for discord over policy at the Fed,” Perfumo said.
Bitcoin’s pullback comes as the market weighs internal Fed discord at a time when traders are pricing roughly 90% odds of rates holding steady through year-end. That dynamic — a messy transition rather than a clean handoff — is emerging as a net negative for crypto and other growth assets.
“The vote itself was a loud crack in the Powell-era consensus, with four dissents, the most on a single decision since October 1992,” Perfumo said.
Three officials dissented over what they viewed as an “easing bias” in the central bank’s policy. Warsh has pledged to cut rates quickly, but Powell emphasised that inflation risks are rising, particularly as Brent crude still trades above $100 per barrel amid stalled US-Iran negotiations.
The tension showed up fast in the crypto exchange-traded fund space. Traders dumped $138 million in spot Bitcoin ETFs following the meeting, reversing part of April’s recovery, DefiLlama data shows.
Still, April has been the best month since October. Traders have poured just under $2 billion into Bitcoin ETFs this month.
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Butchered handoff?
The split exposed a Fed no longer marching in lockstep as Powell prepares to step down on May 15.
“Powell's indication that he'll stay on as a board governor past his term as chair, albeit with a low profile, complicates the balance of power,” Perfumo said.
Powell confirmed at his press conference that he intends to remain a voting member of the Fed’s Board of Governors after his term as chair ends.
The decision carries little precedent. Outgoing chairs typically leave the institution.
Senators advance Warsh nomination after DOJ drops Fed chair probeSenators advance Warsh nomination after DOJ drops Fed chair...Senators advance Warsh nomination after DOJ drops Fed chair probe
Meanwhile, Warsh, President Donald Trump’s nominee to replace Powell, cleared the Senate Banking Committee later on Wednesday. A final confirmation vote is expected soon.
Powell insisted he has no desire to act as a “shadow chair.” Yet his continued presence as a voting governor potentially limits Warsh’s freedom to reshape the institution.
Powell, who was also installed by Trump during his first term in the Oval Office, has clashed with the president for months over interest rates. Earlier in April, Trump threatened to fire Powell if he does not go peacefully.
“I had long planned to retire,” Powell said. “The things that have happened in the last three months have left me no choice but to stay.”
Crypto market movers
Bitcoin is down 1.6% over the past 24 hours at $75,731.
Ethereum is down 3.1% over the past few hours at $2,251.
What we’re reading
Senators advance Warsh nomination after DOJ drops Fed chair probe — DL News
Banks are fighting a ‘sideshow’ as Clarity Act stalls. Will it matter? — DL News
New Bitcoin Wallet Offers Post-Quantum Protection Without a Fork — Unchained
The AI margin trap — Milk Road
DeFi lender Sky hits $124m revenue record. Yet token holders aren’t impressed — DL News
Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email him at lance@dlnews.com
