Bitcoin Slips Below $83K as Fed Succession Fears Hit Crypto at Full Speed

Bitcoin has slipped below $83K and briefly tapped a low of $81K, cutting through crucial intra day support around $85K. This has plunged sentiment to extreme fear levels not seen in weeks. Yesterday and today’s drop in Bitcoin wasn’t driven by the Fed’s decision to pause interest rate cuts (which was already largely priced in) but by a convergence of bearish macro headwinds weighing on risk assets. 

Bitcoin Spot ETF outflows have intensified downside pressure, but macro uncertainties seem to be the dominant catalyst. Rising US-Iran tensions, growing expectations of another US government shutdown and the official selection of former Federal Reserve Governor Kevin Warsh as Trump’s choice to succeed Jerome Powell unsettled markets. Warsh is viewed as the least dovish candidate, who has called for a regime change with a tighter U.S. monetary policy, which spooked assets including crypto. 

Bitcoin’s Drop Was Fast But The Liquidations Were Faster 

Within the span of 12 hours yesterday and today, Bitcoin retraced by around 8%. The macro fears triggered a cascade of long liquidations during this period and over the past 24 hours over $790 million worth of BTC positions were wiped out with $752 million accounting for longs. 

The concentration and velocity of these liquidations suggest forced selling dominated price action, rather than a broad-based loss of conviction. That said, downside momentum, particularly a break below key psychological levels like $80K and the lower band of Bitcoin’s multi-month parallel channel, could tilt this dynamic and invite more discretionary selling. 

Why $85K Mattered More Than Traders Admitted 

Apart from being another round number, the $85K mark stood as a solid support zone for Bitcoin since November. Multiple pullbacks during this period found buyers in this region, showing that it acted as a structural floor.  

Once that level was breached, prices quickly moved through with little resistance. The failure to hold this level effectively opened up short term air pockets that allowed prices to accelerate to the downside. Looking ahead, the next realistic support area sits near Bitcoin’s True Mean Price, currently around $80.7K, which coincides with the lower band of the multi month range. 

The Real Catalyst: A Fed Chair Curveball 

What initially was speculation around Kevin Warsh becoming the next Fed Chair reignited uncertainty across markets. Earlier chatter around Rick Reider (BlackRock’s Chief Investment Officer) painted a picture of continuity and dovish support. However, Warsh’s confirmation removed ambiguity forcing markets to rapidly reprice expectations around the future of U.S. monetary policy. This change matters because crypto markets are hypersensitive to policy credibility. 

With this news, the dollar rose against major currencies, with the DXY ticking up as traders adjusted expectations around future liquidity and interest rate guidance. This move in the DXY is particularly bearish for crypto. Crypto and the DXY have a traditionally inverse relationship wherein when the dollar rises, investors tend to de-risk and re-allocate into dollar denominated instruments or safe-haven FX.  

What this Episode Quietly Revealed 

This episode underscored just how dominant leverage still is in shaping short-term crypto price action. Despite the macro trigger being rooted in narrative rather than a concrete policy shift, the market reaction was swift and mechanical. The speed of the move and the scale of liquidations that followed reinforced that positioning, not fundamentals, continues to dictate near-term volatility in Bitcoin, especially during periods of thin liquidity and elevated uncertainty.

More broadly, it highlighted the return of political risk as a meaningful market driver and further cemented Bitcoin’s role as a macro proxy rather than a purely idiosyncratic asset. As expectations around U.S. monetary policy leadership shifted, Bitcoin responded much like other global risk assets, reflecting changes in confidence, liquidity, and policy credibility. Far from fading, this macro sensitivity appears to be strengthening, suggesting that Bitcoin’s price behavior is increasingly intertwined with the same forces that move currencies, rates, and equities.