A warning has emerged that bitcoin could go through months of consolidation ahead of a planned change in the chair of the U.S. Federal Reserve next month.

On April 29, Cointelegraph reported that markets have raised the prospect that Kevin Warsh taking office as Fed chair could increase short-term volatility across risk assets such as cryptocurrencies and stocks.

CRYPTOWZRD, a cryptocurrency trading account, recently said on X, formerly Twitter, that new downward pressure on bitcoin could reappear in June. The account said bitcoin has tended to correct first and then continue higher whenever the Fed leadership changes. It also claimed, "Each time a new Fed chair takes office, bitcoin corrected for several months before a full-fledged rally began."

The issue this time is that the direction of monetary policy is not yet clear. Warsh is set to lead the Fed after Jerome Powell, but it is uncertain whether he will immediately roll out policies friendly to risk assets. U.S. President Donald Trump said in a CNBC interview last week that he would be disappointed if Warsh does not cut rates at the first Federal Open Market Committee meeting in June.

Markets, however, see a strong chance that the benchmark rate will be kept at its current level at Powell's final FOMC meeting. Rate cuts are generally viewed as supportive for crypto markets, but Powell has not rushed to cut rates despite public pressure from Trump. In that situation, the change of Fed chair has emerged as a factor that could unsettle policy expectations again.

There are also opposing signals in the market. Expectations are that liquidity conditions could turn supportive for risk assets as the Fed begins expanding its balance sheet again this year. James Lavish of the Bitcoin Opportunity Fund said the Fed has added about $200 billion of U.S. Treasuries back onto its balance sheet in recent months. He added, "The Fed has put about $200 billion of U.S. Treasuries back on its balance sheet in the last few months."

Views on Warsh's policy stance are also mixed. Charlie Bilello of asset manager Creative Planning, its chief market strategist, said in YouTube content that there are contradictions in Warsh's position. He said Warsh has been building a case for rate cuts while strongly criticising the Fed's decision to keep rates low during the post-COVID inflation surge in 2021 and 2022. Bilello called the policy at the time a "fatal policy mistake" and said he agreed with that assessment.

Warsh has also shown a critical stance on balance-sheet expansion. That has led to the view that whether the market's expected uptrend in 2026 will actually continue will depend not only on whether rates are cut but also on whether the stance of supplying liquidity is maintained. Bitcoin and altcoin markets are expected to watch the June FOMC and the new Fed chair's first policy signals as key variables.

Oops. Look what's reversed and headed higher again. That's right, the Fed has added ~$200B of US Treasuries back onto its balance sheet in the last few months. So much for tightening the money supply. QT is officially over. QE-light is in the house. pic.twitter.com/htQhWNb2bG