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David Pokima
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Bitcoin collapsed below the psychological $70,000 support level Thursday, marking a 15-month low as markets aggressively repriced the liquidity outlook under incoming Federal Reserve Chair Kevin Warsh.
The world’s largest cryptocurrency fell as low as $67,619. The rout erased $40 billion from open interest in under 48 hours, showing a capitulation of leveraged longs.
The catalyst? The market’s digestion of President Trump’s nomination of Kevin Warsh. While Warsh is historically pro-crypto, calling Bitcoin “new gold,” traders are fleeing his well-known stance on balance sheet reduction.
The Liquidity Vacuum
Spot ETF flows exacerbated the decline, with total assets under management sinking below $100 billion for the first time in Q1.
The technical damage is severe, as the $70,000 level had served as a fortress for bulls throughout 2025. Its failure has exposed the lack of bid depth below, with order books thinning out toward the mid-$60k range.
The divergence is stark: Gold shattered records Thursday, crossing $5,100/oz. Investors are rotating from “risk-on” stores of value (BTC) to “safety” stores of value (Gold), anticipating that Warsh’s restrictive monetary policy will strengthen the dollar and drain the excess liquidity that fuels crypto rallies.
The Warsh Paradox: Pro-Bitcoin, Anti-Liquidity
This sell-off represents a sophisticated pricing of the “Warsh Paradox.” Retail sees a pro-Bitcoin nominee; institutions see a hawk who despises quantitative easing.
Warsh has explicitly argued that the Fed’s swollen balance sheet distorts asset prices. The desk view? The “Fed Put” is dead. Warsh may support Bitcoin’s legality, but he will not print the dollars required to pump it. Expect volatility to persist until the market finds a price floor based on utility rather than liquidity overflow.
