Friday brought a major moment for U.S. monetary policy, and crypto barely flinched. As has been the case all week, bitcoin is trading in a tight range around the $77,000 level in U.S. morning action. The market is watching, waiting, and not committing either way.
The day's headline came not from a crypto chart but from the White House. Kevin Warsh was sworn in by President Trump as chairman of the U.S. Federal Reserve, replacing Jerome Powell, who will continue at the Fed as a governor.
Warsh Steps In With a Reform Agenda
Warsh didn't waste time signalling the direction he intends to take. At his swearing‑in ceremony, he pledged to lead a reform‑oriented Federal Reserve, learning from past successes and mistakes, escaping static frameworks and models, and upholding clear standards and integrity.
Big words. But the economy he's inheriting isn't making his job easy.
Stagflation Warning Signs Are Growing
Right as Warsh was preparing to take the reins, a fresh batch of economic data landed, and it wasn't encouraging. The University of Michigan Consumer Sentiment Index for May fell to a record low of 44.8, down from 48.2 previously, and well below economist forecasts of 48.2. The Expectations Index also fell to a record low of 44.1.
That's a significant drop. And the inflation picture got worse alongside it. The UMich 1‑year Consumer Inflation Expectations Index rose to 4.8% from 4.5% previously. The 5‑year Inflation Index climbed to 3.9% from 3.4%.
Low confidence, rising inflation expectations, it's the stagflation combination that central bankers dread most.
Rate Cut Dreams Are Fading Fast
Trump appointed Warsh hoping he would steer the Fed toward cutting interest rates. That's looking less likely by the day. The Iran war has sent oil prices soaring and re‑ignited what had been cooling inflation.
Rate traders are now pricing in more than a 70% chance of one or more rate hikes by the end of 2026.
That's a remarkable turnaround from where rate expectations stood just months ago. Markets are essentially pricing in the opposite of what the White House wanted.
Crypto and Stocks Both Shrug
With this much macro noise in the background, you might expect markets to react sharply. They didn't. Bitcoin continued trading little‑changed at just under $77,000, while U.S. stocks posted modest gains ahead of the three‑day weekend, with the Nasdaq ahead 0.5%.
Prices Soften Into the Close
As the trading session wound down, bitcoin pulled back to $76,200, down 1.7% over the past 24 hours and nearing its lowest level of the week. Ether, Solana, and XRP fell by slightly more than bitcoin, while the Nasdaq held onto modest gains of 0.3%.
No panic. No surge. Just a market holding its breath ahead of a long weekend, watching how the new Fed chair's first moves play out in the weeks ahead. The calm won't last forever.
