Key Takeaways:
- Kevin Warsh’s hawkish Fed history may have sparked broad selling
- BTC & ETH trade below their 2Y MAs, historically consistent with value zones
- Spot BTC ETF & MSTR cost bases sit near break even as BTC MVRV pushes lower
Digital Asset Commentary
President Trump announced Kevin Warsh as the next Fed Chair last week, coinciding with what ultimately marked the peak of a parabolic rally in precious metals. Warsh, an institutional inflation hawk, has been openly critical of quantitative easing and has advocated for shrinking the Fed’s balance sheet. Coincidence or not, precious metals, equities, and crypto all sold off following the announcement, with BTC down nearly 20% over the past two weeks. Adding to the pressure, ETF outflows have totaled more than $2.81 billion. Weekend volatility was further amplified by rising Iran–US tensions in the Strait of Hormuz, though those fears eased by Sunday as diplomacy prevailed.
Bitcoin, briefly more than 40% below its October all-time high, has entered potential support and value zones based on historical price oscillators. The two-year moving average (2YMA), a level BTC has remained below during all prior bear markets, currently sits near $86k. Historically, periods below the 2YMA have lasted roughly 230 days on average. Ethereum, now down 52% from its all-time high, is also trading below its 2YMA of $3,100. While this signal has been noisier for ETH, it has nonetheless coincided with prior market bottoms. Most other alt coins have fared far worse than ETH, plunging deeper below the October 10 th liquidation event.
Aggregate spot BTC ETF average cost basis, alongside Strategy’s (MSTR) BTC cost basis on 713,000 BTC, shows unrealized profits of both hovering near break-even. On-chain metrics further reflect this unrealized profit compression, with the market value to realized value (MVRV) ratio at 0.72, calculated using the last transacted price of each coin. Historically, MVRV readings above 6.0 have aligned with market tops, while readings near or below 0.0 have marked cycle bottoms. Notably, the realized aggregate price of $55.8k, where MVRV would reach zero, converges with the 200-week moving average near $58k.
For educational purposes only. Past performance is not indicative of future results. Investments may be speculative, illiquid and there is a total risk of loss of principal. There is no guarantee that any specific outcome will be achieved.
