Bitcoin tumbles toward $70,000 as Fed nomination spooks markets

Bitcoin plunged deeper into a volatile week, sliding toward the $70,000 support area as leveraged liquidations and shifting expectations around Federal Reserve leadership unnerved risk markets. Exchange data showed bitcoin hit about $70,052.38, its weakest level since November 2024, while ether traded near $2,086.11 as traders unwound positions across the crypto complex.

The fall capped a rapid descent from the roughly $83,000 area seen earlier in the cycle. Market prices earlier in the week recorded a 2.2 percent drop to $76,825.40 by 03:06 a.m. US Eastern Time, after touching $74,635.50 during the same session. Those moves were driven in part by a sharp weekend selloff that pushed prices toward the $75,000 area and triggered broad leveraged liquidations, amplifying downside momentum.

Macro developments added to the pressure. President Donald Trump nominated Kevin Warsh to be the next Federal Reserve chair on January 30, 2026, and markets immediately began to price the implications for monetary policy. The US dollar index rose 0.15 percent on Monday to a one-week high as traders adjusted currency and rate expectations, reinforcing headwinds for dollar-denominated risk assets including cryptocurrencies.

Analysts and market strategists have advanced differing interpretations of what Warsh’s nomination means for policy. Some traders treated the selection as a signal of potentially firmer policy that could tighten financial conditions further. Other market commentary portrayed Warsh as a market-oriented reformer who favors rules-based policy, a characterization that has been linked to an initial market reaction sometimes described as a "Warsh Premium" and to an early drop in bitcoin from around $83,000 into the mid-$70,000s.

John Higgins, chief economist at Capital Economics, said "the market reaction to Donald Trump’s nomination of Kevin Warsh as Federal Reserve Chair broadly aligns with their view that the president has made a relatively safe choice. He added that the prevailing impression is that Warsh is not fully under presidential influence and would not undermine Federal Reserve independence or heighten concerns about currency weakness."

Sentiment metrics underscored the fragility in retail and speculative positioning. The Fear & Greed Index registered 14 on February 3, a reading that signals extreme fear and tends to coincide with elevated volatility and the liquidation of leveraged bets. That kind of sentiment backdrop can deepen drawdowns as algorithmic and margin-based selling feeds on itself.

Looking ahead, market attention will focus on the Senate confirmation process for Warsh and the formal transition should he be confirmed, with any signals of a materially different policy approach able to shift asset-price expectations well before an actual change in rates. For crypto markets, the interaction of policy expectations, dollar strength, and the mechanics of leveraged positions is likely to determine whether the $70,000 area holds as a structural support or gives way to a deeper correction.

Traders and policy watchers will also watch further dollar moves, Fed communication, and on-chain liquidation data to gauge the risk of additional forced selling. Until those variables settle, the combination of policy uncertainty and crowded leverage suggests heightened downside risk for bitcoin in the near term.