As bitcoin falls toward $80k, here's why Fed Chair Warsh may not be enough to revive the crypto

By Gordon Gottsegen

Bitcoin can get a boost from easing monetary policy, but investors are cautious right now

Bitcoin hit a low of $81,065 today.

It seems like bitcoin can't catch a break.

After dipping below the $90,000 level last week, bitcoin (BTCUSD) fell another 7% this week, hitting an intraday low of $81,065 overnight. This happened against a backdrop of heightened volatility across multiple asset classes, signaling that investors have been feeling risk-averse in recent weeks - and risk-averse investors don't want to park their money in bitcoin.

That may have investors wondering what it would take to get bitcoin out of this rut. Bitcoin was trading at its lowest level since the November 2025 plunge, and may risk dipping below $80,000 for the first time since April 2025's tariff-related selloff, according to Dow Jones Market Data.

It could come down to two things: looser global monetary policy and more risk-friendly investors.

"In my personal view, bitcoin's continued weakness and its consolidation around the 84,000 USD area do not stem from any deterioration in bitcoin's underlying fundamentals," Linh Tran, a senior market analyst at XS.com, wrote in an email. "Instead, this move primarily reflects short-term shifts in the global monetary environment and overall risk appetite."

It's easy to see how risk appetite affects bitcoin. Crypto is typically a volatile asset, and bitcoin often trades similarly to high-beta growth stocks. This month, investors have been showing a decreased tolerance for risk. They have been rotating out of tech stocks and have been diversifying into other parts of the market. On top of that, investors have been moving into metals, which has caused gold, silver and copper to surge.

Tran said that bitcoin faces direct competition from these metals. She noted that geopolitical tensions and policy uncertainty this month - whether that's the military operation in Venezuela, tariff threats over control of Greenland, President Donald Trump's tone at Davos, escalating tensions in Iran and so on - have been driving investors to more traditional defensive assets. While bitcoin bulls believe in the crypto as a store of value, recent market moves signal that the broader investor demographic isn't buying it.

"The fact that gold and other precious metals continue to benefit from policy and geopolitical uncertainty, while bitcoin does not, suggests that investor risk appetite is currently tilted more toward defense than risk-seeking," Tran told MarketWatch.

Related: Former Goldman commodities guru sees another decade of rising prices for metals and critical minerals

A new Fed chair may not change things for bitcoin

Beyond investor confidence, the other piece of the puzzle is monetary policy. Tran said bitcoin is a "a liquidity-sensitive" asset, which means it benefits from central banks cutting interest rates and injecting more money into the global economy.

"In my view, isolated rate cuts can help bitcoin enter a phase of re-accumulation, but they are not sufficient to move bitcoin into a sustainable recovery phase," she said.

Right now, several central banks are leaning more "hawkish" with monetary policy. The Bank of Japan has been raising rates, there's quantitative tightening in Europe and the Federal Reserve held rates steady this week.

In the U.S., there's speculation that the Fed may shift its tone to favor more rate cuts in the future. Trump has been vocal about asking the Fed to lower rates, and on Friday, he picked Kevin Warsh as his nominee to be the new Fed chair when Jerome Powell's term ends in May.

Read: Trump picked Kevin Warsh to boost markets. What this means for your portfolio.

Warsh has a mixed record when it comes to monetary policy. In the past, he's favored rate hikes, but Trump wouldn't have picked him if he expected Warsh to keep rates high.

When it comes to crypto, Warsh has said he views bitcoin as a sustainable store of value, and he's even invested in crypto companies. But a favorable stance on crypto doesn't necessarily mean he'll shift monetary policy to boost it.

But even if Warsh pushes the Fed to cut rates when he joins in May, it'll take further institutional adoption of bitcoin - in addition to monetary policy easing - to push the crypto's price higher.

"In other words, lower interest rates may support bitcoin's rebalancing efforts, but if macroeconomic uncertainty persists and exchange-traded fund flows fail to remain relatively constructive, incremental buying pressure is unlikely to be strong enough to generate a meaningful rebound," Tran said.

-Gordon Gottsegen

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01-30-26 1202ET