Bitcoin’s roughly 50% drawdown has much less to do with cycle déjà vu than a deeper break available in the market’s previous playbook, in accordance with Jeff Park, companion and CIO at ProCap Monetary, who argues a potential Kevin Warsh-led Federal Reserve may 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, greater BTC, has stopped doing the explanatory work it as soon as did.
What Kevin Warsh Means For Bitcoin
Park’s place to begin was a blunt declare: the assumed linkage between Bitcoin and world liquidity has “been damaged for fairly a while.” He pointed to what he described as steadily rising world liquidity via 2025, citing Michael Howell’s monitoring and estimating the extent at roughly $170 trillion, alongside broad-based energy in different asset courses.
“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 truly is lots of causes to assume that Bitcoin ought to have additionally already participated, however it didn’t.”
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That divergence, he argued, is why traders ought to cease leaning on backward-looking heuristics which have grow to be 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 raise BTC. “It’s value remembering that there’s issues which can be continually altering in regards to the world the place all the things appears to be like a little bit bit completely different than the best way you had modeled it earlier than,” he stated.
From there, Park reframed the controversy round his “unfavorable rho” versus “constructive rho” Bitcoin framework. The previous is the risk-asset model most traders 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” charge 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 charge itself. In that world, what we’re saying is usually because the risk-free charge shouldn’t be the risk-free charge. As a result of the greenback hegemony shouldn’t be the greenback hegemony and we’re now not capable of value the yield curve within the methods we’ve recognized which means we’d like one thing completely different… and bitcoin is that hedge.”
Park steered 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, though we in fact want costs had been greater. For individuals who have been listening to our present (month-to-month going ahead), the truth that we’re in a bear market received’t come as a giant shock.
Nonetheless, Bitcoin can survive all this! Hear beneath 👇 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 doubtlessly pivotal. Park recounted an interplay from 2021 or 2022 during which 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 truly goes to resolve lots of issues and convey efficiencies and Bitcoin is a core a part of that cultural material.”
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Crucially, Park emphasised Warsh shouldn’t 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 is likely to be rebuilt. One line, Park stated, has “at all times 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 battle, moderately than an end 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 may speed up a rethink of Fed–Treasury coordination. He stated he’s “optimistic about the potential for a brand new Fed Treasury accord that Bessant and Warsh can rewrite,” arguing the guts of the difficulty is the Triffin dilemma and the strain between the greenback’s exterior reserve position and inside saver position. “It’s not that we’d like fed independence,” Park stated. “We really want Fed interdependence with the Treasury.”
The irony, in Park’s framing, is that “extra accommodative insurance policies could actually truly not be the catalyst” for Bitcoin’s subsequent bull section. As an alternative, he argued Bitcoin’s bid finally 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 grow to be extra believable. The individuals who “want Bitcoin,” he stated, should not US traders with infinite options, however these dealing with constraint and censorship.
If Park is correct, Warsh isn’t bullish for Bitcoin as a result of he’ll ship a well-recognized liquidity wave. He’s bullish as a result of a Warsh-era Fed, paired with a Treasury aligned on system-level reform, may push markets towards the “constructive rho” regime, the place Bitcoin’s worth proposition is much less about using stimulus and extra about difficult the structure that made stimulus needed within the first place.
At press time, BTC traded at $66,396.
Featured picture created with DALL.E, chart from TradingView.com
