Bitcoin Breaches $74K as Warsh Nomination Triggers $2.5B Liquidation Cascade
A $2.5 billion leverage flush sends Bitcoin to levels unseen since November 2024 as markets price in a hawkish Fed under Kevin Warsh.
The Trump Trade is officially dead.
Bitcoin capitulated early Tuesday, piercing the $74,000 support level to trade as low as $73,762, its lowest price since President Trump’s election victory in November 2024. The collapse marks a decisive end to the post-election euphoria, erasing the last of the gains that once drove the asset to a $126,000 peak in October.
The sell-off was neither gradual nor orderly. A violent liquidity flush wiped out $2.5 billion in leveraged positions over 24 hours, ranking as the 10th largest liquidation event in crypto history. As of press time, Bitcoin struggles to reclaim $78,000, while the broader altcoin market remains submerged in double-digit losses.
The Warsh Effect: Hard Money, Strong Dollar
While geopolitical tensions with Iran provided the initial spark, the structural damage was dealt by macro repricing. President Trump’s nomination of Kevin Warsh for Federal Reserve Chair has forced markets to price in a regime of scarce liquidity.
Warsh, a known hawk who has previously criticized the Fed’s balance sheet expansion, represents a pivot away from the easy-money policies that crypto assets historically thrive on. The immediate reaction was a surge in the U.S. Dollar Index (DXY), which mechanically pressured dollar-denominated assets. Gold slumped 9% in parallel, dismantling the “safe haven” thesis that bulls have touted for months.
“Bitcoin behaving like a liquidity outlet, sold aggressively as traders sought cash… implies the market is pricing in a ‘hard money’ Fed that won’t bail out risk assets,” noted a market analysis circulated Tuesday.
Market Mechanics: The $78K Floor Collapses
The technical breakdown was severe. The $78,000 level, which had served as a fortress for bulls throughout January, gave way under the weight of forced selling. Once that floor broke, stop-loss orders triggered a cascade.
Data from CoinGlass confirms the carnage: over 339,000 traders were liquidated, with long positions accounting for nearly 80% of the wiped-out capital. This flush effectively resets open interest to levels not seen since early 2025.
No “Buy the Dip”
Perhaps most telling is the silence. January marked Bitcoin’s fourth consecutive monthly decline, its longest losing streak since the 2018 bear market. The “laser-eyed” exuberance of 2025 has evaporated.
Institutional flows mirror this apathy. Spot Bitcoin ETFs recorded their fourth day of net outflows, signaling that traditional finance allocators are de-risking ahead of the Warsh confirmation hearings. With the Crypto Fear & Greed Index firmly in “Extreme Fear” (14), the market lacks the speculative bidding power to stage a V-shaped recovery.
