How the Fed chair nomination and geopolitics crashed the crypto market

On Tuesday, cryptocurrency markets came under heavy pressure: Bitcoin experienced a sharp decline, falling below the $73,000 level. This marked the deepest drop for the digital currency in nearly a year and a half. Selling pressure, macroeconomic factors, and strengthening bearish sentiment shook the market, leading to massive liquidations worth billions of dollars. Bitcoin briefly touched $72,884 during trading its lowest level since November 6, 2024, when BTC fell to $68,898.
The sell-off triggered a cascade of forced liquidations in the derivatives market totaling between $2.2 billion and $2.56 billion in just one day, according to analytical platforms. The decline exceeded 40% from the all-time high of $126,000 recorded in October 2025. Notably, the current drop has completely wiped out all the gains Bitcoin posted after Donald Trump's victory in the November 2024 presidential election, despite his ambitious statements about turning the United States into the "global capital of cryptocurrencies."
The market also reacted to Trump's political move: on January 30, he nominated Kevin Warsh as Chair of the Federal Reserve. Known as a proponent of tight monetary policy, Warsh is perceived by investors as a signal of potential tightening of financial conditions. 10x Research analyst Markus Thielen noted that "markets see Warsh as a bearish signal for Bitcoin: his push for monetary discipline and reduced liquidity makes cryptocurrencies less attractive to investors."
Volatility was not limited to Bitcoin. Ethereum led in terms of liquidation volume, with about $961 million wiped out, followed by Bitcoin with $679 million in liquidated positions, according to Coinglass. Reuters analysts emphasized that such large scale liquidations indicate a "growing sensitivity of the crypto market to risk-off sentiment." Overall investor sentiment deteriorated further amid geopolitical tensions and a broad retreat from risk assets.
Traditional markets also came under pressure: U.S. stock indices closed lower. The technology sector was hit particularly hardSalesforce shares plunged 8%, while Thomson Reuters stock lost nearly 20% amid concerns that artificial intelligence is undermining traditional business models.
Opportunities for traders ,financial markets are entering a phase of heightened turbulence. The nomination of a potential Fed Chair with hawkish views, geopolitical instability, and fears surrounding disruptive technologies are shaping new reference points for investors.
Cryptocurrencies, traditionally sensitive to liquidity risk, are showing weakness, but at the same time, they offer traders opportunities for active trading amid high volatility. Traders can use the current environment for short-term speculation, both on market declines and potential rebounds. Opening short positions, applying options-based strategies, and trading Bitcoin and Ethereum derivatives can be effective ways to profit from the current dynamics.