BY COMFORT OGBONNA
Bitcoin, the world’s largest cryptocurrency by market value, fell sharply on Saturday, extending losses from the previous session as investors reacted to concerns about tighter financial conditions in the United States. The digital asset was down 6.53% at $78,719.63 as of 12:48 p.m. ET, underscoring growing unease across crypto markets.
The sell-off accelerated after bitcoin dropped as low as $81,104 on Friday, its weakest level since November 21. The decline came as the U.S. dollar strengthened following the selection of former Federal Reserve Governor Kevin Warsh as the next chair of the central bank. Traders and investors worry that Warsh could favor a more restrictive monetary stance, potentially draining liquidity from the financial system.
Warsh has previously argued for what he describes as a regime change at the Federal Reserve and has advocated for a smaller central bank balance sheet. Such views have raised alarm among market participants who believe that abundant liquidity has been a key driver of gains in speculative assets over recent years, including cryptocurrencies.
Bitcoin and other digital currencies have often benefited from periods when the Fed expanded its balance sheet and injected liquidity into money markets. Those conditions tended to support risk-taking and speculative investments. A shift toward tighter policy, however, threatens to reverse that dynamic, pressuring assets that thrived in an easy-money environment.
Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said the Fed’s “bloated balance sheet combined with heavy-handed bank regulation” has kept liquidity trapped within Wall Street rather than flowing into the broader economy. According to Jacobsen, that imbalance helped fuel bubbles across multiple asset classes, including bonds, cryptocurrencies, precious metals and meme stocks. When those expectations change, he noted, markets can unwind quickly.
Ether, the second-largest cryptocurrency, also came under heavy pressure, sliding 11.76% to $2,387.77 on Saturday afternoon. The broader crypto market has struggled to find a clear direction since last year’s sharp downturn, especially as gold and major stock indexes have staged strong rallies, leaving digital assets lagging behind.
“Sometimes these price adjustments feed on themselves,” Jacobsen said, adding that Friday’s abrupt drop served as a reminder of the inherent risks in crypto markets. He warned it is “possible, if not likely, that we see more selling over the next few days” as traders reassess their positions.
The recent weakness highlights a difficult period for cryptocurrencies during what many had hoped would be a more favorable environment marked by stronger inflows and friendlier regulation under President Donald Trump. Instead, bitcoin has lost roughly a third of its value since hitting record highs in October last year, signaling that optimism has given way to renewed caution amid shifting monetary expectations.
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