2026-5-25 12:06 |
Bitcoin has remained under pressure below $78,000 even after Kevin Warsh took over as Federal Reserve chairman, as traders continue to focus on rising Treasury yields and low chances of short-term rate cuts.
According to data from CoinGecko, Bitcoin (BTC) dropped to $74,190 on Saturday before recovering toward the $77,000 range, though buyers have struggled to reclaim the $78,000 level over the past several sessions.
The decline came less than a day after Warsh, who has previously voiced support for Bitcoin and criticised central bank digital currencies, was sworn in as the new Fed chair.
At the same time, bond markets moved sharply in a direction that analysts said could create problems for risk assets, including cryptocurrencies.
The 2-year US Treasury yield climbed to 4.14%, its highest level since February 2025, despite the Fed’s benchmark rate currently sitting between 3.50% and 3.75%.
Because the 2-year yield often tracks expectations for future monetary policy, traders interpreted the move as a sign that markets no longer expect aggressive easing under Warsh.
CME FedWatch data showed that futures markets are now pricing in the possibility of a 25-basis-point rate hike by December, while expecting rates to remain largely unchanged through most of 2026.
Historical data cited by BCA Research showed the Federal Reserve has frequently raised rates when the 2-year Treasury yield moved above the federal funds rate, as investors anticipated tighter monetary policy ahead.
In previous cycles, yields falling below the Fed funds rate often pointed to expectations for future easing instead.
Higher yields typically weaken Bitcoin’s liquidity-driven narrative because elevated borrowing costs and stronger real returns on government debt can reduce demand for speculative assets.
Hawkish policy concerns offset crypto optimismAlthough Warsh has been viewed favorably within parts of the crypto industry due to his stance on financial innovation and opposition to CBDCs, analysts warned that his policy approach may still create headwinds for digital assets.
In a Saturday post on X, analyst Crypto Patel said Warsh remains “a known inflation hawk,” adding that geopolitical risks tied to Iran and continued labor-market pressure may prevent the Fed from easing policy aggressively.
Patel argued that support for crypto regulation should not automatically be interpreted as support for lower interest rates, a distinction some traders may have overlooked after Warsh’s appointment.
Past Fed leadership transitions have also coincided with extended Bitcoin downturns, according to Lucky, an analyst.
In a Saturday post, the analyst noted that Bitcoin fell 84% after Janet Yellen became Fed chair in 2014, dropped 73% after Jerome Powell took office in 2018, and declined 60% following Powell’s second term in 2022.
Fresh macro concerns have also added pressure to market sentiment this week.
Crypto markets entered a shortened US trading week with investors closely watching possible developments in US-Iran negotiations, upcoming inflation data, and revised GDP figures.
The Kobeissi Letter described the setup as a “short but busy week ahead,” identifying updates surrounding a possible US-Iran agreement as one of the first major catalysts for risk assets.
As previously noted on Invezz, Bitcoin briefly stabilised near $78,000 after President Donald Trump said negotiations with Iran were nearing completion, easing fears of a prolonged disruption in the Strait of Hormuz.
Risk appetite improved across traditional markets as well, with US equities reportedly adding roughly $400 billion in value at Friday’s open following the headlines.
A confirmed agreement could reduce energy-related inflation pressure and improve sentiment across crypto and equities, while stalled negotiations or renewed tensions may revive concerns over oil prices and consumer inflation.
Elsewhere, traders are also preparing for Thursday’s release of April PCE inflation data and the second estimate of Q1 2026 GDP from the Bureau of Economic Analysis.
According to Kiplinger, BofA Securities expects headline PCE inflation to rise 0.4% month over month, while core PCE is forecast to increase 0.3%.
Stronger inflation readings could further reduce expectations for Fed rate cuts and support Treasury yields and the US dollar, conditions that have historically pressured Bitcoin and altcoins.
Softer data, however, may improve the outlook for risk assets if markets begin pricing in easier monetary policy later this year.
Bitcoin price analysisOn the daily chart, Bitcoin continues to trade below all major exponential moving averages, keeping the larger market structure tilted to the downside despite the recent rebound from the $74,000 area.
BTC/USD 1-D price chart. Source: TradingView.
The 20-day EMA sat near $77,816 at the time of writing, while the 50-day and 100-day EMAs remained lower around $76,761 and $76,859, respectively.
Overhead resistance from the 200-day EMA near $81,483 has also capped upside momentum throughout May.
After failing to hold above the $82,000 region earlier this month, BTC slipped back under the short-term moving averages before finding support near the $74,000 to $75,000 zone.
Buyers have since pushed price back toward $77,000, though the recovery remains weak as long as Bitcoin stays below the 20-day EMA and the psychological $78,000 level.
Volume profile data on the daily timeframe also showed a heavy concentration of historical trading activity around the $67,700 region, suggesting that area remains a major long-term support zone if macro pressure intensifies further.
Meanwhile, repeated rejection below the 200-day EMA points to hesitation among traders to rebuild aggressive long positions ahead of key inflation and GDP data later this week.
On the 4-hour chart, short-term momentum has started to improve modestly after Bitcoin defended the recent lows near $74,000.
BTC/USD 4H price chart. Source: TradingView.
The RSI climbed back above 56 after briefly falling near oversold territory earlier in the week, indicating buyers have regained some short-term control.
At the same time, the RSI moving average remained lower near 45, showing momentum recovery is still developing rather than fully established.
Price action on the lower timeframe has also begun forming a series of higher lows since the weekend sell-off, with Bitcoin attempting to stabilise above the $77,000 area.
Volatility, however, remains elevated.
The average true range indicator stayed near 744, suggesting traders should still expect sharp intraday swings while macro headlines continue to drive sentiment.
For bulls, reclaiming the $78,000 to $80,000 region could open the door for another test of the May highs near $82,000, where the 200-day EMA continues to act as a major resistance barrier.
On the downside, losing the $76,000 area again may expose Bitcoin to another retest of the recent $74,000 low, especially if Treasury yields continue climbing or upcoming PCE inflation data strengthens the case for tighter monetary policy.
The post Bitcoin slips below $78K as Warsh-led Fed rattles rate-cut hopes appeared first on Invezz
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