Fed Rate Cut Odds Fall as Senate Advances Kevin Warsh, Will Bitcoin & Gold Crash Again?

Fed rate cut odds plunge as the US Senate advances President Trump’s nominee Kevin Warsh closer to confirmation as the next Fed Chair. Bitcoin and gold erase gains as Warsh could replace Jerome Powell following final confirmation votes this week.

Meanwhile, inflation is rising amid elevated oil prices as Trump said the US-Iran ceasefire is on “massive life support” after dismissing Iran’s peace proposal, fueling concerns that the Strait of Hormuz may stay shut for an extended period.

US Senate Confirms Kevin Warsh as Fed Governor, Fed Rate Cut Odds Dip

The US Senate voted 49-44 to invoke cloture on Kevin Warsh’s nomination to serve as a member of the Board of Governors of the Federal Reserve System. He will remain a governor for a term of 14 years from February 2026.

The Senate is expected to hold final confirmation votes this week, with Republicans’ majority in the chamber signaling approval is assured. Warsh to become Fed Chair before Jerome Powell’s term expires this week. However, Jerome Powell plans to stay on the Fed as his governor term runs until 2028.

Interest rate traders have rolled back expectations for Fed rate cuts in 2026 and 2027. CME FedWatch Tool shows more probability of rates holding steady at the current 3.50%-3.75% target range, with rising odds of Fed rate hikes next year.

Fed Chair nominee Kevin Warsh promised the central bank’s independence on monetary policy despite Trump’s push for Fed rate cuts. He advocated for a smaller Fed balance sheet and cautioned on rapid easing amid inflation concerns.

International worries are mounting over a potential politicization of US dollar swap lines under a Kevin Warsh-led Fed, Reuters reported on May 12. Markets are pricing in Warsh continuing his hawkish stance, pressuring Bitcoin and gold.

Bitcoin and Gold Pare Gains

Bitcoin fell more than 1.50% over the past 24 hours, erasing upside momentum. BTC price is trading near $80,900, slumping from a 24-hour high of $82,098.

Trading volume has dipped by almost 10%, indicating that traders are awaiting cues such as today’s CPI inflation release. The US Senate Banking Committee’s CLARITY Act draft release also failed to rebound prices.

Gold prices dropped another 0.70% to $4700 today, while Silver tanked more than 2% to $84.25. This comes as US 10-year Treasury yields rose to a week high of 4.42% and the US dollar index (DXY) climbed further above 98 on Tuesday amid US-Iran peace talks jitters.

Despite Kevin Warsh’s support for Bitcoin and Trump’s Fed rate cuts demand, investors remain skeptical and fear a crash. Notably, the crypto market wiped out over $240 billion in a day, with $2 billion in liquidations across Bitcoin, Ethereum, XRP, BNB, Solana, HYPE, and other altcoins when Trump nominated Warsh for Fed Chair.

Meanwhile, Bridgewater founder Ray Dalio said Bitcoin has not played the safe-haven role some investors expected, citing a lack of privacy. He also said BTC market remains relatively small and easier to influence, while gold holds a central role in the global financial system.