Jerome Powell will hold his last FOMC press conference on April 29, wrapping up eight years at the Fed during a challenging time. The rate remains in the 3.50–3.75% range, inflation has ticked back up to 3.3%, and the market is still waiting for signals to pivot on rate cuts. His successor, Kevin Warsh, inherits a Fed grappling with unfinished business on inflation, a balance sheet of $6.7 trillion, and markets that are used to trading on liquidity signals.
For the crypto market, this change is particularly significant. Bitcoin has become an asset that reacts sharply to Fed decisions, bond yields, and expectations regarding the regulator's balance sheet during Powell's tenure. Now the market is trying to decipher whether Warsh will bring a new regime or just a stricter version of the familiar policy.
Powell leaves a calm market but departs with unresolved risks.
When Janet Yellen handed the Fed over to Powell in 2018, conditions were relatively soft. Rates were around 1.5%, inflation was close to target, and the regulator's balance sheet was already shrinking as planned. Powell inherited an economy without a recession and attempted to maintain that scenario through gradual rate hikes.
His term has proven to be much more complex. The pandemic, record balance sheet expansion, inflation at 1980s highs, and the banking stress of 2023 have made his era one of the most turbulent for the Fed. Therefore, Powell's final FOMC doesn't look like a calm handover but a transitional moment with many open questions.
Powell's main victory came in March 2020.
Powell's supporters consider his actions in March 2020 to be his main success. The Fed quickly slashed rates to zero, resumed asset purchases, and launched emergency lending programs. The markets received liquidity just as the financial system was on the verge of a full-blown crisis.
This policy has also shifted the crypto market. Bitcoin surged from about $5,000 in March 2020 to a peak above $69,000 in November 2021, moving in tandem with the Fed's balance sheet expansion. That was when BTC finally caught the eye of big investors.
The second success relates to a soft landing.
Later, Powell conducted the sharpest rate hike cycle since Paul Volcker. Rates rose from zero to 5.5%, but the economy did not plunge into a deep recession, and the labor market did not collapse. This became the main argument for those who believe his approach is justified.
By the end of 2024, Powell also shifted his tone regarding Bitcoin. His comparison of BTC to 'virtual gold' became an important market signal and helped solidify Bitcoin's perception as an alternative reserve asset. For the crypto market, this was a rare moment when the Fed chair effectively acknowledged BTC's distinct role in the financial system.
The inflation misjudgment remains the main downside.
The main criticism of Powell relates to the inflation assessment in 2021. The Fed labeled price increases as transitory for too long, even as CPI rose above 7%. Rate hikes only began in March 2022, when inflation had already become entrenched in the economy.
This delay became the basis for criticism from Kevin Warsh. He called the late response a 'fatal policy error' and stated that the Fed needs a new regime. For the markets, this means that the new chair might be less tolerant of inflation and respond more swiftly to price risks.
The banking stress of 2023 became the second major issue.
The sharp rate hike cycle helped curb inflation but created problems for banks holding long bonds on their balance sheets. Silicon Valley Bank, Signature Bank, and First Republic collapsed within days in March 2023. This served as a painful reminder that policy tightening quickly exposes vulnerabilities in the financial system.
Critics of Powell argue that the Fed waited too long and was then forced to act too abruptly. Consequently, the blow fell not only on inflation but also on regional banks. This episode still affects trust in the regulator's communication.
Warsh inherits the Fed with a high rate and a new wave of inflation.
Kevin Warsh arrives at a time when markets were expecting a softer approach, but the data does not give the regulator room for a sharp turnaround. The rate has been held in the 3.50–3.75% range for three consecutive meetings. The March FOMC forecast suggests only one rate cut in 2026 and another in 2027.
Inflation is a problem again. CPI rose to 3.3% in March after a spike in gas prices linked to the Iran conflict. The forecast for core PCE in 2026 has also been raised, making rapid rate cuts less likely.
Warsh wants to change the Fed's regime.
During Senate hearings, Warsh spoke about the need for a new inflation framework. He also criticized the previous communication format and advocated for a smaller Fed balance sheet. His position indicates a tighter line on liquidity, even if rates are not formally raised.
The balance question is especially important. Currently, the Fed's assets total around $6.7 trillion, and Warsh believes that a smaller balance could align with a healthier economy and lower inflation. For the markets, this implies a risk of accelerated liquidity reductions rather than quick support through rates.
For Bitcoin, Warsh appears to be a mixed bag.
The crypto market is receiving a complex signal. On one hand, Warsh is more stringent on inflation and may reduce the balance sheet faster. This is unfavorable for BTC in the short term, as Bitcoin remains sensitive to liquidity conditions.
On the other hand, Warsh has publicly acknowledged Bitcoin as a stable store of value, opposed retail central bank digital currency, and stated that cryptocurrencies have already become part of the U.S. financial system. His personal disclosures also show significant investments in crypto assets and related infrastructure. For the industry, this is a rare mix of tight monetary policy and a more friendly stance towards digital assets.
The market is focused on rates, the balance sheet, and the tone of the press conference.
Powell's last press conference will be significant not just as a symbolic finale. The market will look for signals about why rate cuts have not materialized, how seriously the Fed views the new inflation surge, and how Powell will pass the agenda to Warsh. Even the wording could impact bonds, stocks, and Bitcoin.
There’s also a political angle. Powell might stay on the Board of Governors until 2028, even if he steps down from the chair position on May 15. If he retains his spot in the system, the shift to Warsh's new policy could be less abrupt than the market anticipates.
What’s next?
For investors, the main question is straightforward: will the Fed under Warsh be softer on the crypto market but tougher on liquidity? If the new chair speeds up balance sheet reductions and maintains caution on rates, Bitcoin could face short-term constraints, even with a more favorable rhetoric on digital assets. However, if inflation starts to decrease, BTC will have more room to grow.
Powell leaves with an ambiguous legacy. He saved the markets in 2020, executed a sharp tightening without a deep recession, but misjudged inflation, leaving his successor with a tricky balance between prices, rates, and liquidity. For Warsh, it’s not a blank slate but a set of unresolved issues that will immediately test the markets and the crypto industry.
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