Bitcoin Turmoil: Warsh Pick Triggers $2.5B Liquidations

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Well now, Bitcoin slid under eighty thousand after the word went rumbling through the grapevine that Kevin Warsh would be sittin’ in the Fed chair’s chair, and the crowd of speculators went to the bank with tattered coats and big dreams. They blamed it on nerves and leverage alike, and about $2.5 billion of levered longs went splashin’ down the river before the coin found a stubborn little rest near a mid-cycle support some folks swear could be the cycle’s floor.

Summary

  • Bitcoin slid under eighty grand as Warsh’s appointment stirred a risk-off mood and crypto deleveraging, with roughly $2.5 billion in levered longs liquidated.
  • QCP Asia says BTC is clinging to a mid-cycle support, but momentum and options positioning still hint at trouble if that patch gives way.
  • Analyst PlanC wagers the $75k-$80k range may mark a capitulation-style cycle bottom, echoing those shakeouts that have preceded mighty recoveries.

Bitcoin fell below $80,000 over the weekend after the swell of news made known that Kevin Warsh would become the next chair of the Federal Reserve, and that tidbit sent the crypto crowd into a full-fledged deleveraging spree, according to the folks at QCP Asia.

In a Monday market note, QCP Asia reported that Bitcoin briefly dipped into a mid-cycle support area after breaching some key technical lines, while Ether sank to lower thresholds. The tumble chewed up about $2.5 billion in liquidations of levered long positions, piling more downward pressure amid a steady drain of U.S. spot Bitcoin ETFs.

Bitcoin Washout

Risk aversion following the Warsh news stretched beyond the crypto mines. Stocks sagged and traditional safe-havens like gold and silver backed away from their recent highs as traders reeled at what a Warsh-led Fed might do next. Markets have started pricing in a better chance of earlier policy nudges or a tighter monetary belt, which has pressed non-yielding assets into the dust, according to QCP Asia. Higher margin requirements in futures markets also hastened the unwinding of leveraged bets, the firm stated.

Bitcoin has since steadied above a mark that aligns with cycle lows seen earlier this year. Options markets still wear their caution like a raincoat, with positions skewed toward put protection, though demand for downside hedges has cooled somewhat compared with other periods of stress, QCP Asia noted.

The firm observed that during the November slide from the peak, hedging activity ran hotter than current levels around the mid-cycle area, suggesting some exposure has already been trimmed.

Analysts at QCP Asia warned that price action remains vulnerable. Momentum indicators keep pointing lower and the upside looks limited near recent resistance, leaving the market open to further liquidation-driven moves if support breaks. A sustained break below current support could push the retrace deeper toward earlier levels, while a decisive recovery above prior resistance might help calm volatility and steady sentiment, the firm stated.

“In the current climate, attention will likely shift to whether institutional accumulation makes a comeback, particularly given Strategy’s average cost basis, along with any de-escalation in geopolitical risks, notably around Iran,” QCP Asia stated. “Fed communications will also be watched closely, with any remarks from Chair-designate Warsh that temper expectations of tightening possibly serving as an additional stabilizing influence.”

Analyst PlanC stated that Bitcoin’s weekend drop to mid-cycle levels may represent a cycle floor, characterizing the move as a capitulation-style low rather than the start of a prolonged downturn. Bitcoin briefly touched that region before stabilizing and rebounding, though it remains significantly lower on the month and below its October peak.

PlanC compared the recent sell-off to past drawdowns that preceded major recoveries, including the 2018 bear market low, the March 2020 decline and the sharp drops following the FTX and Terra-Luna collapses. The analyst estimated the current cycle bottom likely falls within the mid-range of recent lows, suggesting the move could be a final shakeout within an ongoing bull cycle.

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2026-02-02 14:55