President Donald Trump formally nominated Kevin Warsh as the next chair of the Federal Reserve on Friday, saying he’ll go down as “one of the GREAT Fed Chairmen, maybe the best.” But the market reaction had already played out.

Bitcoin sold off sharply ahead of the announcement, as traders priced in rising odds that Warsh would get the job. Late Thursday, BTC slid to nearly $81,000, its lowest level in two months, as Polymarket odds surged toward 95%.

This story is an excerpt from the Unchained Daily newsletter.

The move triggered a broad risk-off response, with roughly $1.8 billion in leveraged positions wiped out and volatility jumping across asset classes.

The concern is not Warsh personally, but what he represents. He is widely seen as favoring monetary discipline, higher real rates, and a smaller Fed balance sheet, all of which run counter to the liquidity-heavy environment that has historically supported risk assets.

Macro trader Alex Kruger wrote that Warsh “has advocated for a structural overhaul of the Federal Reserve and a ‘new Treasury-Fed Accord.’ He contends that the Fed’s balance sheet has been used to subsidize Wall Street and should be reduced significantly.”

As those odds rose, the U.S. dollar strengthened, with the DXY pushing higher, while volatility surged, reflected in sharp moves in both equity and Treasury volatility indices. That combination tends to pressure assets like bitcoin, which remain sensitive to tighter financial conditions.

The irony is that Warsh has also argued that an AI-driven productivity boom could justify aggressive rate cuts. But markets are not trading that future. They are reacting to the near-term signal: less tolerance for easy money.