Bitcoin slid to a two-month low as speculation over the next U.S. Federal Reserve chair triggered a broad risk-off move across cryptocurrencies.
The world’s largest cryptocurrency fell as investors reacted to reports that former Federal Reserve Governor Kevin Warsh could be appointed to replace Jerome Powell, raising fears of tighter liquidity conditions that typically pressure speculative assets.
Bitcoin dropped 2.5% to around $82,300 in Friday trading, extending losses from the prior session and putting the asset on track for a fourth straight monthly decline, its longest losing streak in eight years.
Market sentiment has deteriorated sharply since Bitcoin peaked in October, with prices now down roughly one-third from record highs despite earlier expectations of friendlier regulation under President Donald Trump.
Selling accelerated as the U.S. dollar strengthened on expectations that a Warsh-led Federal Reserve would pursue a smaller balance sheet and tighter monetary policy. Bitcoin and other cryptocurrencies have historically benefited from abundant liquidity and large central bank balance sheets.
Analysts note that crypto assets have often traded as hedges against monetary expansion. Talk of withdrawing liquidity has therefore weighed heavily on Bitcoin alongside gold and other speculative assets.
Ethereum also came under pressure, falling 2.9% to about $2,735 and touching a two-month low. Broader crypto markets have struggled for direction after last year’s downturn, underperforming rallies seen in equities and precious metals.
Market participants also pointed to weakness in U.S. technology stocks as an added headwind. A sharp 10% decline in Microsoft shares following cautious commentary around AI spending rippled across global markets and dampened risk appetite.
With macro uncertainty rising and liquidity expectations shifting, traders remain cautious as cryptocurrencies search for support amid a challenging backdrop.
