After being officially endorsed by U.S. President Donald Trump during his first term, Jerome Powell was sworn in as chairman of the Federal Reserve on February 5, 2018. He spent the next eight years and more than 100 days as head of the financial institution, but experienced a massive fallout with Trump that led to countless public ridicules.
Kevin Maxwell Warsh is Trump’s new pick, who officially took office as Fed chairman on May 22. The 56-year-old financier and lawyer is considered the first Bitcoin supporter to take on this role, prompting many crypto insiders to speculate that the largest digital asset will benefit greatly. But is that what ChatGPT thinks?
Will $BTC Rocket?
The popular AI chatbot said Warsh is far from a “newcomer,” having previously served as a Fed governor. He is known for his “more market-sensitive approach, his skepticism of prolonged ultra-easy monetary policy, and for his close ties to Wall Street.”
According to ChatGPT, this is important because the price of Bitcoin is “increasingly tied to liquidity conditions and policy expectations from the Fed.” He added that the arguments in favor of $BTC This would be the case if Warsh signals faster rate cuts, which seems unlikely at the moment, easier financial conditions and support for market stability.
Bitcoin would thrive under such conditions, as liquidity would increase, real returns might fall, and investors would seek other stores of value.
“A more ‘market-friendly’ flow could quickly reignite risk appetite – and bitcoin is often the first to respond,” ChatGPT said.
(Not so) Hidden risks
However, the popular AI chatbot depicted a different scenario, which it described as “not all doves are optimistic.” He explains that Warsh expressed concerns about the “persistence of inflation”, which became more than evident after the start of the war against Iran, and “excessive monetary expansion”.
Therefore, if his strategy continues the path set by Jerome Powell, i.e. a more hawkish stance, then these higher rates could “put pressure on risk assets, including bitcoin”.
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ChatGPT also warned that the market is unlikely to experience significant volatility from the nomination itself. This would require clearer signals and define some of the main catalysts that could trigger more fluctuations:
- First political speech
- Dot Plot Predictions
- Tone on inflation versus growth