Bitcoin’s plunge toward $70,000 has investors on edge—but is this the bottom, or just the beginning of a deeper fall? The world’s largest cryptocurrency teetered dangerously close to the critical $70,000 mark on Thursday, with its downward spiral showing no signs of slowing. Bitcoin dropped 2% in early European trading, after plummeting as much as 3.5% during the Asian session to $70,052.38—its lowest point since November 2024. And this is the part most people miss: Ether, the second-largest cryptocurrency, also slipped 0.7% to $2,111.34, inching closer to the $2,000 threshold it hasn’t breached since May of last year.
But here’s where it gets controversial: Analysts point to Kevin Warsh’s nomination as the next Federal Reserve Chair as the catalyst for this latest crypto rout. Why? Because Warsh is expected to shrink the Fed’s balance sheet—a move that could spell trouble for speculative assets like cryptocurrencies. Historically, crypto has thrived when the Fed flooded markets with liquidity, but a tighter monetary policy could strip away that support. “The market fears a hawk with him,” noted Manuel Villegas Franceschi of Julius Baer. “A smaller balance sheet won’t provide any tailwinds for crypto.”
To put this in perspective, Bitcoin has already lost over 7% this week, pushing its year-to-date decline to nearly 20%. Ether, meanwhile, is down almost 30% in 2024. These losses aren’t happening in a vacuum—they’re part of a broader trend that began with last October’s record crash, which wiped out leveraged positions and left investor sentiment fragile. Since then, digital assets have struggled to regain momentum, with institutional investors pulling billions from ETFs.
Deutsche Bank analysts highlight a startling trend: Institutional ETFs have seen massive withdrawals since the October 2025 downturn, with U.S. spot Bitcoin ETFs alone losing over $3 billion in January, following $2 billion and $7 billion outflows in December and November, respectively. “This steady selling suggests traditional investors are losing faith, and pessimism about crypto is growing,” they wrote. But is this a temporary setback, or a sign of deeper structural issues in the crypto market?
Here’s the bold question: Could Kevin Warsh’s Fed chairmanship mark the end of crypto’s liquidity-driven rally, or will the market find new catalysts to bounce back? Let us know your thoughts in the comments—this debate is far from over.
