The macro landscape just shifted in a major way, said the popular AI model.
After he was officially backed by US President Donald Trump during his first term, Jerome Powell was sworn in as Chairman of the Federal Reserve on February 5, 2018. He spent the next eight years and 100+ days as head of the financial institution, but experienced a massive fallout with Trump that led to countless public ridicules.
Kevin Maxwell Warsh is Trump’s new pick, who officially stepped in as the Fed Chair on May 22. The 56-year-old financier and attorney is believed to be the first bitcoin supporter to take this role, which prompted many crypto insiders to speculate that the largest digital asset will benefit a lot. But is that what ChatGPT thinks?
Will BTC Rocket?
The popular AI chatbot said Warsh is far from a “newcomer,” as he has already served as Fed governor. He is known for a more “market-sensitive approach, skepticism toward prolonged ultra-loose monetary policy, and for his close ties to Wall Street.”
According to ChatGPT, this matters because bitcoin’s price has “increasingly become tied to liquidity conditions and Fed policy expectations.” It added that the bull case for BTC would be if Warsh signals faster rate cuts, which doesn’t seem likely at the moment, easier financial conditions, and support for market stability.
Bitcoin would thrive under such conditions, as liquidity will increase, real yields are likely to fall, and investors would seek alternative stores of value.
“A more ‘market-friendly’ Fed could quickly revive risk appetite – and bitcoin is often the first to react,” said ChatGPT.
(Not So) Hidden Risks
However, the popular AI chatbot outlined a different scenario, which it described as “not all doves are bullish.” It explained that Warsh has expressed concerns about “inflation persistence,” which has become more than evident after the war against Iran started, and “excessive monetary expansion.”
Consequently, if his strategy continues the path laid out by Jerome Powell, meaning a more hawkish stance, then these higher rates could “pressure risk assets, including bitcoin.”
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ChatGPT also cautioned that the market is unlikely to experience significant volatility by the actual appointment alone. It would need clearer signals and outlined some of the key catalysts that can unlock more fluctuations:
- First policy speech
- Dot plot expectations
- Tone on inflation versus growth
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