Bitcoin slips as Fed chair speculation hits risky assets

• Bitcoin is on track for a fourth consecutive monthly decline, its longest losing streak since 2018, despite initial hopes for a 'golden era' under President Trump's crypto-friendly administration
• Warsh's preference for a smaller Fed balance sheet threatens the liquidity environment that has historically benefited cryptocurrencies, prompting investors to sell speculative assets
• The crypto selloff was compounded by broader market concerns after Microsoft's AI spending report disappointed investors, with Ether also dropping 2.9% to $2,735.48

Market Summary: Bitcoin Slips on Fed Chair Speculation

Key Developments:

Bitcoin fell 2.5% to $82,300 on Friday, reaching a two-month low amid speculation about the next Federal Reserve chair. The cryptocurrency has lost one-third of its value since reaching record highs in October, heading toward a fourth consecutive monthly decline—its longest losing streak in eight years.

Main Driver:

Market turbulence intensified on reports that former Fed Governor Kevin Warsh is expected to be nominated as President Trump's pick to replace Fed Chair Jerome Powell. Warsh has advocated for "regime change" at the central bank and a smaller Fed balance sheet, which analysts view as negative for cryptocurrencies and other speculative assets that benefited from the Fed's previous liquidity injections.

Broader Market Impact:

• Ether declined 2.9% to $2,735.48, also hitting a two-month low
• The dollar strengthened as risk assets sold off
• Concerns about AI spending also pressured markets, following Microsoft's 10% stock drop after reporting heavy AI expenditures with modest revenue gains

Market Context:

Cryptocurrencies are underperforming despite initial optimism around a "golden era" under the Trump administration's expected friendly regulatory approach. Meanwhile, gold and stocks have rallied significantly, leaving digital assets behind. Portfolio strategist Damien Boey noted that assets positioned as "hedges against balance sheet expansion"—including crypto, gold, and bonds—are selling off on prospects of Fed liquidity withdrawal.

The combination of tightening monetary policy expectations and AI investment uncertainty is creating headwinds for speculative assets across markets.