Portfolios

Warsh Is Fed Chair Nominee

Reports late Thursday afternoon indicated that the White House was preparing to support Kevin Warsh as the nominee for the next Federal Reserve Chair. Warsh surged to over 90% probability on Polymarket around 7:00 p.m. on Thursday, overtaking Rick Rieder. On Friday morning, President Trump announced via Truth Social that he was moving forward with Warsh as his nominee.

Initial market reaction suggests investors are pricing in a modestly more hawkish policy outlook:

• Higher yields
• A steeper yield curve (consistent with hawkish balance sheet / dovish rate policy)
• A stronger dollar
• Lower crypto prices

Warsh is viewed as an unconventional choice by many, largely due to his reputation as an inflation hawk and a proponent of a smaller central bank balance sheet. It is widely believed that he resigned from the Fed in 2011, prior to the end of his term, due to his opposition to QE2. He has also historically expressed a preference for the Fed to focus narrowly on inflation rather than broader macroeconomic outcomes.

That said, the White House’s desire for lower interest rates does not necessarily conflict with Warsh’s policy framework. One interpretation is that a more hawkish approach to balance sheet policy could be used to rationalize more rate cuts. Whether this proves supportive or restrictive for liquidity-sensitive assets will depend heavily on how such a policy mix is implemented.

The most dovish interpretation is that Warsh was chosen precisely because of his reputation. His hawkish tendencies and prior experience at the Fed may help sway FOMC participants toward rate cuts that might otherwise be more difficult to justify.

As such, I would expect an initially hawkish market reaction, but it is premature to conclude that this nomination materially alters the path of monetary policy absent concrete, forward-looking guidance from Warsh himself.

Bottom Line: A Warsh nomination may be interpreted as incrementally hawkish for policy and liquidity, adding to immediate-term headwinds for crypto. That said, until we receive clearer forward-looking policy views from Warsh, it is difficult to argue that the underlying trajectory of monetary policy has meaningfully changed because of this nomination.

Regulatory Update

Market Structure Passes Senate Ag Committee on Party Lines: On Thursday, The Senate Agriculture Committee advanced its version of the crypto market-structure bill on a party-line vote, designating the CFTC as the primary regulator for much of the digital asset market. While some Democrats support moving the legislation forward, they pushed for stronger ethics safeguards, and an amendment to restrict elected officials from holding digital assets was ultimately rejected. The partisan outcome was expected but is still disappointing, given that the bill will require 60 votes to pass the Senate.

Senate Banking Committee Progress Delayed: Meanwhile, a parallel bill in the Senate Banking Committee remains stalled over proposed limits on stablecoin reward programs and faces further delays as lawmakers pivot toward housing legislation ahead of the elections.

Crypto Influence on Midterms Keeps me Optimistic: On Wednesday, Fairshake, the crypto super PAC that played an outsized role in the 2024 elections announced that they raised additional capital to bring its total war chest to $193 million. Given how consequential this money is likely to be in the upcoming midterms and how central crypto was to President Trump’s platform, I remain optimistic this ultimately gets done this year, though, as discussed in our recent webinar, we may need to wait longer to see real progress.

Bottom Line: I remain constructive on the ultimate passage of crypto market structure legislation, but ongoing partisan friction and competing legislative priorities make it difficult to rely on this as a near-term catalyst for the crypto market.

Is a “Value Zone” Approaching?

In my webinar on Tuesday, I noted that while I remain 50% allocated across crypto portfolios, I am waiting for either a clearer value zone, a new catalyst, a sustained trending regime, or a broader reset in positioning before redeploying additional dry powder.

At present, we are not in a bullish trending environment, there are no clear catalysts on the immediate horizon, and broader risk asset pricing does not suggest a meaningful reset in positioning. That said, as the ongoing selloff in crypto deepens, it is increasingly plausible that we approach a “value zone” in the coming days/weeks.

The mid-$70k region stands out as a logical area for BTC to find some degree of support, supported by several converging data points:

• ~$74k was the intraday high reached in March 2024, following the launch of the BTC ETFs
• ~$74k was the intraday low in April 2025 during the tariff-driven selloff
• ~$74k approximates the current aggregate cost basis of BTC ETF holders (ex-GBTC)
• ~$76k is MicroStrategy’s current cost basis on its BTC holdings

The March 2024 high and April 2025 low suggest a large volume of BTC changed hands in this zone, increasing its technical and psychological significance. Many market participants are likely to have these levels marked as areas of interest.

The ETF cost basis clustering in this range further implies historical demand. While a decisive break below ~$74k could trigger capitulatory selling, it is more likely that this zone is tested and defended before that occurs.

Although MSTR’s cost basis does not, on its own, create a technical or fundamental support level, it likely reinforces the psychological importance of this area.

Bottom line: while I remain skeptical that the mid-$70k range represents the definitive low for the year, investing is a game of probability and risk-reward. As we look to selectively redeploy capital, this region is beginning to look increasingly attractive on a relative basis. I would likely deploy some capital across our portfolios if we reach this area in short order.