Kevin Warsh’s push for a brand new Fed–Treasury “accord” is reigniting a well-recognized market argument: whether or not Washington is drifting towards a softer-rate, higher-liquidity regime that tends to favor arduous belongings, together with bitcoin and crypto, even when it raises the stakes for bonds.
The talk flared after Bloomberg reported that Kevin Warsh floated the concept of “a brand new accord with the Treasury Division,” echoing the 1951 settlement that redefined the connection between the 2 establishments. Bloomberg reported over the weekend that the idea might quantity to a restricted bureaucratic revamp, however a extra bold effort might “see elevated volatility and concern over the US central financial institution’s independence,” relying on how explicitly it hyperlinks the Fed’s stability sheet selections to Treasury financing.
Looming over the concept is the political strain to deal with debt-service prices as a coverage constraint. Bloomberg pointed to curiosity prices “operating at an annual clip of round $1 trillion,” and quoted SGH Macro Advisors’ Tim Duy warning that an accord may very well be learn as one thing greater than course of reform. “Somewhat than insulating the Fed, it might look extra like a framework for yield-curve management,” Duy mentioned. “A public settlement that synchronizes the Fed’s stability sheet with Treasury financing explicitly ties financial operations to deficits.”
Can Bitcoin Get The Bid?
In bitcoin circles, the accord dialog is being interpreted via the lens of yield-curve management (YCC) and debt monetization, not simply the trail of the coverage price. Luke Gromen framed it bluntly, citing a latest FFTT view: “Our base case is that Warsh might be as dovish as Trump wants.” He added a well-recognized punchline for macro merchants: “Math > Narratives (once more).”
“Our base case is that Warsh might be as dovish as Trump wants.” -FFTT, final week
Math > Narratives (once more) pic.twitter.com/aHMDlz2jzM
Analyst Lukas Ekwueme took the argument further: “Warsh, the next Fed chair, will inflate the debt away. He is in favor of yield curve control. This means pegging US short-term interest rates to an artificially low level. The Fed commits to buying unlimited amounts above that level to push interest rates down.”
In that telling, the Fed pegs yields at “an artificially low level” and backs the peg with potentially unlimited purchases — a structure Ekwueme compared to the World War II era. He argued the political logic is straightforward: nominating someone “more hawkish than Powell” would clash with Trump’s prior attacks on the Fed for being too hawkish, making a dovish tilt the more consistent outcome.
Bull Theory, a crypto-focused account, echoed the historical parallel while stressing that Warsh’s public framing is also about reducing the Fed’s entanglement in long-duration government financing. The account argued Warsh could prefer a portfolio shift toward Treasury bills, a smaller balance sheet, and clearer limits on when large bond-buying programs can occur — potentially with “closer coordination with the Treasury on debt issuance.” But it also warned the market shouldn’t confuse “limits” with “tightening” if the end result is a policy mix that suppresses real yields and keeps liquidity conditions easy.
CoinFund President Christopher Perkins added: “I continue to think that the crypto markets got the Warsh appointment wrong. A new Fed-Treasury Accord is the plan…has been all along. Additional coordination, or any shift in responsibilities to Scott Bessent and the US Treasury will bullish for crypto IMO–once things settle. At least for the next 3 years.”
For bitcoin, the central question is the direction of real yields and the credibility of the “independence” anchor because both feed into how investors price fiat debasement risk and liquidity scarcity.
The pro-crypto interpretation is consistent: if an accord evolves into a framework that caps parts of the curve or otherwise lowers real yields, it can push capital out the risk-free complex and into assets that behave like inflation hedges or duration substitutes. Bull Theory put it in plain terms: “If Warsh’s framework leads to lower real yields, rate cuts, and easier liquidity conditions, that usually supports risk assets like equities, gold, and crypto. Because when bond returns fall, capital looks for higher-return alternatives.”
The caveat is that the same setup could increase volatility in rates markets. Bloomberg flagged that an ambitious accord could spook investors about the Fed’s independence, while Bull Theory argued that reduced Fed support for long-term yields alongside heavy Treasury issuance could steepen the curve and lift term premiums.
For crypto traders, that combination can create a two-speed regime: supportive liquidity narratives on one hand, and sudden risk-off impulses if bond volatility spills into broader financial conditions.
At press time, BTC traded at $69,151.
