Bitcoin’s roughly 50% drawdown has much less to do with cycle déjà vu than a deeper break available in the market’s outdated playbook, based on Jeff Park, companion and CIO at ProCap Monetary, who argues a potential Kevin Warsh-led Federal Reserve might catalyze a regime shift in how Bitcoin trades.
In an dialog with Anthony Pompliano, Park stated he believes Bitcoin has been in a bear market “for fairly a bit,” and warned that the acquainted reflexive framework, simpler coverage, extra liquidity, increased BTC, has stopped doing the explanatory work it as soon as did.
What Kevin Warsh Means For Bitcoin
Park’s start line was a blunt declare: the assumed linkage between Bitcoin and international liquidity has “been damaged for fairly a while.” He pointed to what he described as steadily rising international liquidity by way of 2025, citing Michael Howell’s monitoring and estimating the extent at roughly $170 trillion, alongside broad-based energy in different asset lessons.
“Asset costs have all gone up,” Park stated, referencing a “frenzied rally” in metals and company credit score spreads close to all-time lows, earlier than including: “there really is loads of causes to suppose that Bitcoin ought to have additionally already participated, nevertheless it didn’t.”
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That divergence, he argued, is why buyers ought to cease leaning on backward-looking heuristics which have develop into psychological crutches. In his telling, crypto markets have repeatedly assumed historical past would re-run—altcoin rallies after bitcoin rallies, a sturdy four-year cycle, and the concept that QE or decrease charges reliably carry BTC. “It’s price remembering that there’s issues which can be continually altering in regards to the world the place all the pieces appears just a little bit totally different than the best way you had modeled it earlier than,” he stated.
From there, Park reframed the talk round his “damaging rho” versus “optimistic rho” Bitcoin framework. The previous is the risk-asset model most buyers acknowledge: charges down, threat up, Bitcoin up. The latter is the endgame: Bitcoin rising as charges rise, successfully difficult the notion of a secure “risk-free” price by calling into query the credibility of the financial order itself.
“That is the legendary elusive excellent holy grail of what Bitcoin is supposed to be,” Park stated of positive-rho Bitcoin. “What it’s undermining is the risk-free price itself. In that world, what we’re saying is usually because the risk-free price will not be the risk-free price. As a result of the greenback hegemony will not be the greenback hegemony and we’re not capable of worth the yield curve within the methods we’ve recognized which means we want one thing totally different… and bitcoin is that hedge.”
Park recommended the market could also be inching towards that worldview as US policymaking turns into extra explicitly about system restore, not incremental tweaks. He described the present US administration as trying to “wrestle management of the economic system away from the Federal Reserve” by way of deregulation, tax cuts, tariffs, and efforts to weaken the greenback, leaving the Fed “on their again foot” amid shifting “tectonic plates” throughout coverage channels.
Completely loved recording this, although we after all want costs have been increased. For individuals who have been listening to our present (month-to-month going ahead), the truth that we’re in a bear market gained’t come as an enormous shock.
Nonetheless, Bitcoin can survive all this! Hear under 👇 https://t.co/JSrKOw5QLY
— Jeff Park (@dgt10011) February 5, 2026
That’s the place Park positioned Warsh, a former Fed governor and, in Park’s telling, a uncommon mixture of institutional fluency and technological conviction, as probably pivotal. Park recounted an interplay from 2021 or 2022 wherein Warsh expressed enthusiasm for Bitcoin whereas criticizing “phonies” who deal with tech as “magic.” Warsh, Park stated, “really believed deep in his coronary heart that this isn’t magic… that it really goes to unravel loads of issues and convey efficiencies and Bitcoin is a core a part of that cultural cloth.”
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Crucially, Park emphasised Warsh will not be an anti-institution wrecking ball. As an alternative, he portrayed Warsh as somebody who understands why the Fed’s legitimacy has been challenged and the way it could be rebuilt. One line, Park stated, has “all the time caught” with him: “inflation is a selection.” Park contrasted that with Fed communication that, in his view, typically treats inflation as one thing that merely occurs resulting from tariffs or conflict, slightly than an final result of coverage instruments and mandates.
For Park, a Warsh appointment issues much less as a result of it ensures simpler coverage and extra as a result of it might speed up a rethink of Fed–Treasury coordination. He stated he’s “optimistic about the opportunity of a brand new Fed Treasury accord that Bessant and Warsh can rewrite,” arguing the guts of the difficulty is the Triffin dilemma and the stress between the greenback’s exterior reserve function and inner saver function. “It’s not that we want fed independence,” Park stated. “We really need Fed interdependence with the Treasury.”
The irony, in Park’s framing, is that “extra accommodative insurance policies could in truth really not be the catalyst” for Bitcoin’s subsequent bull part. As an alternative, he argued Bitcoin’s bid in the end strengthens when the world feels much less like “peacetime” and extra like “wartime”, when industrial, navy, and monetary coverage dominate, centralization pressures rise, and capital controls develop into extra believable. The individuals who “want Bitcoin,” he stated, will not be US buyers with infinite alternate options, however these going through constraint and censorship.
If Park is true, Warsh isn’t bullish for Bitcoin as a result of he’ll ship a well-known liquidity wave. He’s bullish as a result of a Warsh-era Fed, paired with a Treasury aligned on system-level reform, might push markets towards the “optimistic rho” regime, the place Bitcoin’s worth proposition is much less about driving stimulus and extra about difficult the structure that made stimulus essential within the first place.
At press time, BTC traded at $66,396.
Featured picture created with DALL.E, chart from TradingView.com