Markets were shaken when Kevin Warsh's nomination for Fed Chairman was announced: Is the era of "easy money" over? Warsh resigned from the Fed in 2011 in opposition to QE. Now he's returning, with a balance sheet of $6.6 trillion. This shock was followed by a tremendous volatility. Gold experienced its sharpest daily drop since 1983, silver had its worst day since 1980, Bitcoin greeted $60K, and commodity markets were shaken. From macro to commodities, from indices to crypto, everything is in the shadow of the Warsh Shock.

January 30, 2026, became a historic turning point for the markets. Trump officially announced former Fed Governor Kevin Warsh as his nominee for Fed Chairman (Powell's term ends in May). Warsh served at the Fed from 2006-2011, gaining experience during the 2008 crisis, but resigned in 2011 due to strong opposition to QE (quantitative easing). Historically known as a "hawk" (supporter of high interest rates), he has recently signaled a desire for interest rate cuts, but the real danger lies in his opposition to QE. Currently, the Fed's balance sheet is $6.6 trillion, and Warsh wants to shrink it.

Warsh's nomination signaled "no more easy money," and markets were shaken. Shrinking the Fed's balance sheet = withdrawing liquidity = putting pressure on asset prices. Warsh wants to release long-term bonds to private markets, but this will raise long-term interest rates, harming leveraged assets like housing, stocks, and cryptocurrencies. Markets panicked, fearing the end of the "Fed Put" (the Fed's guarantee to rescue the market). In other words, the scenario where the Fed prints money and things calm down in the event of a crisis has been shelved (at least that was the expectation). Gold, silver, Bitcoin, and even technology stocks have fallen sharply. The dollar has jumped over 2%, signaling the beginning of a new “hard money” regime. This volatility, which they call a “warsh shock,” seems likely to continue for some time.

Due to the partial government shutdown, the critical unemployment data scheduled for release on Friday, February 6th, was not published. BLS spokesperson Emily Liddel stated that “data collection, processing, and release have been suspended until the government budget is approved.” Markets were expecting 60,000 jobs and 4.5% unemployment; if it came in below 50,000, the Fed could have made two rate cuts, but this scenario is now on hold. The employment report includes “benchmark revisions” (annual adjustments). Employment growth in 2025 may actually be much weaker than anticipated. Only 50,000 jobs were added in December (the expectation was 60,000). Glassdoor economist Daniel Zhao said, “Looking back at 2025, we may see the job market actually slower than we thought, which means it’s much closer to a standstill.” Weak employment = Fed rate hike pressure = dollar may weaken, gold/crypto may recover. However, uncertainty increased with the report being delayed, and markets are looking at proxy data (ADP, weekly jobless claims).

Until Warsh arrives at the Fed in May, it will create short-term 1-2 day shocks, but the trend will not change. The main issue is Warsh’s balance sheet reduction plan (ending QE), so the question of “When will Warsh be approved?” is the focus of the markets, rather than NFP and CPIs. The Tillis blockade in the Senate Banking Committee continues, approval will likely be delayed until March-April. Until then, every data point is “noise,” and the trend is under the effect of a “Warsh Shock.”

The week of February 2-8 was a week of sharp volatility for commodity markets. Gold fell from $5,091 to $4,402, closing the week at $4,964. Silver plummeted from $92 to $64, ending the week at $77.94. Copper remained relatively resilient, fluctuating between $6.15 and $5.50, closing the week at $5.93. Brent oil continued its rise, finishing the week at $67.55. Warsh's nomination boosted the dollar, and commodities reacted sharply. Warsh's opposition to QE poses a threat to commodities. Gold experienced its sharpest daily drop since 1983 on January 30th (-9%), while silver saw its worst day since 1980 (-31%). The reason is that Warsh is expected to shrink the Fed balance sheet and withdraw liquidity from the market, at least that's the initial expectation. In the long term, a strong QT could put pressure on commodities, while in the short term, an interest rate cut could bring about a recovery. But it seems we have a sharp QT ahead along with an interest rate cut, which could lead to a very severe crisis.

Billionaire Chinese trader Bian Ximing opened a historic short position in silver: 450 tons (30,000 contracts) worth approximately $300 million. Bian has made $3 billion in gold since 2022. He attacked silver in the last week of January. He increased his short position from 18,000 lots to 28,000 lots (January 30, the day silver hit its all-time high). Chinese regulators intervened: there are 350 tons of physical silver in SHFE, but Bian had opened a 450-ton short position ("naked short"). The position was frozen, margins were increased, and it was leaked to Bloomberg.

Bian's short position was one of the catalysts for the silver crash, but the main reason is Warsh. Chinese intervention is protecting silver bulls (for now), positions are frozen, and new short positions are limited. The physical market continues to have a supply deficit, industrial demand is strong, but speculative attacks in the paper market are increasing volatility. In a Warsh + QT environment, silver may remain in the $60-80 range; if the Fed cuts rates, the $100 target may be back on the agenda.

The week of February 2-8 saw sharp reversals in US stock markets. The S&P 500 closed down -0.1% weekly at 6,932. The Dow Jones rose +2.5% weekly to 50,115, surpassing 50,000 for the first time and setting a new all-time high. The Nasdaq closed down -2.5% weekly at 25,075. Regarding the SP500 specifically, we emphasized in previous sections that the uptrend had been lost. The current situation is that it managed to close above the SMA50, but there's no need to get excited unless we see closes roughly above 6,986, and on the daily timeframe, momentum is now in the hands of the bears. The first four trading days of the week continue to have the opposite closing prices (sell for four days, buy on the fifth, or vice versa).

Let me emphasize this again: Bitcoin and the entire crypto market are in a BEAR cycle. The Bitcoin MVRV metric is currently at 1.25 points and continues to fall. It's illogical to talk about a major uptrend in Bitcoin without seeing the MVRV price above its own SMA365 again (SMA365 —> 2.00). Bitcoin has been in a BEAR market and continues to fall since October 2024, when it closed below the SMA365. For a market so hungry for liquidity, the Warsh nomination could be a doomsday scenario. The Fed balance sheet will shrink, QT will accelerate, and liquidity will be withdrawn. All three of these factors are a nightmare for Bitcoin and other altcoins. The CQ Bull-Bear Indicator also shows that bears are gaining strength every week. However, the metric shows that the bear market is not yet fully mature and has not yet found its bottom. With the Warsh effect, we can assume that Bitcoin may have found the bottom of the bear market. Unfortunately, the level we will be watching here is Bitcoin's realized price of 55K. Bitcoin has tested this level in all bear cycles and has stayed below it for a short time.

The Warsh Shock is not a one-week event; it's a REGIME change. Shrinking the Fed's balance sheet means withdrawing liquidity. Withdrawing liquidity means crushing asset prices. Since 2008, markets have lived on the breath of QE, and now that breath is being taken away. Gold, silver, Bitcoin, tech stocks... they are all facing the same question: "If the Fed isn't going to save us, what is our real value?" Is history repeating itself? In 1929, the Fed also adopted a tight monetary policy, liquidity dried up, and markets collapsed. Is a similar scenario unfolding in 2026? Warsh's QT plan hasn't been announced yet, but markets are pricing in the worst. Bitcoin's realized price could test $55K (as in all bear cycles). Gold and silver may be far from their glory days. The S&P's uptrend has already been broken.

This week, NFP and CPI data will be released, but these are "noise." The real question is when Warsh's plan will be confirmed and how QT will take shape. Until then, every data point will create short-term shocks, and the trend will remain under the influence of the Warsh Shock. The question on my mind is: Almost 100 years later, are we facing a 1929-style depression?

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