 ▲ Federal Reserve (Fed), Donald Trump, Bitcoin (BTC) / AI-generated image |
Donald Trump’s nomination of the next chair of the Federal Reserve delivered a short-term shock to the markets. However, some analysts view it as a sophisticated liquidity-supply strategy designed to prepare for an unprecedented surge in cryptocurrencies and equities.
Crypto analyst Lark Davis said in a video published on his YouTube channel on February 8 (local time) that Kevin Warsh, a former Federal Reserve governor nominated as the next Fed chair, would completely reshape the market landscape. While markets were briefly gripped by fear due to Warsh’s historically hawkish stance during past financial crises, Davis emphasized that investors should focus on the fact that Warsh is an advocate who recognizes Bitcoin (BTC) as a store of value comparable to gold. In 2020, Warsh remarked that “Bitcoin is like a new gold for investors under 40,” lending legitimacy to including digital assets in investment portfolios.
Behind this nomination lies a carefully engineered liquidity plan led by U.S. Treasury Secretary Scott Bessent. Davis expects that Bessent and Warsh will work together to ease the Supplementary Leverage Ratio (SLR) regulations in April, releasing trillions of dollars in liquidity currently trapped within the banking system into the broader market. This would represent a shift away from direct quantitative easing (QE) by the Federal Reserve, instead maximizing effective liquidity through private financial institutions.
The Trump administration’s core objective is to supercharge the U.S. economy through low interest rates and a weaker dollar. According to Davis, Warsh’s belief in an era of high productivity driven by advances in AI technology and deregulation raises the likelihood that he will adopt a dovish stance, maintaining low rates without sparking inflation concerns. This policy direction is expected to spur job creation and revitalize the housing market, potentially recreating the powerful economic expansion seen between 2004 and 2007 and triggering a broad-based rally across asset markets.
Nevertheless, heightened market volatility appears inevitable as the 2026 midterm election year approaches. Davis noted that historically, in years following a new president’s inauguration that include midterm elections, the S&P 500 has experienced average corrections of about 18%. Recent sharp declines in the cryptocurrency market and falling silver prices are also interpreted as part of this broader macroeconomic adjustment, though the long-term liquidity expansion trend is viewed as intact.
Rather than reacting to short-term price noise, investors are advised to position themselves early for opportunities in large upcoming IPOs and real assets such as copper, which is expected to face supply shortages. The current market downturn represents an optimal period to accumulate high-quality assets through dollar-cost averaging (DCA), and once the powerful trend of rate cuts becomes evident, asset markets are likely to experience explosive and difficult-to-contain growth. The market has already boarded the train heading toward a sea of liquidity, and only investors who maintain a long-term perspective are expected to reap the substantial economic rewards ahead.
Disclaimer: This article is for investment reference only, and no responsibility is assumed for investment losses based on it. The content should be interpreted for informational purposes only.