Stocks and Crypto Crash Each Time a New Fed Chair Takes Over. How to Prepare Your Portfolio for Kevin Warsh.

Nash Riggins

Mon, May 18, 2026 at 3:23 PM EDT 6 min read

We all know that Wall Street loves certainty. That’s why everybody’s on the edge of their seats watching the rapid ascension of Kevin Warsh.

You see, there are few institutions that shape market certainty more than the U.S. Federal Reserve. The Fed’s stable and relatively predictable monetary and fiscal policy enable investors to act with confidence. But that confidence instantly evaporates when there’s a change of leadership at the Fed.

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Financial markets normally take a beating during periods of transition — particularly speculative assets like crypto. Markets stumble in the early days of a new regime, and the selloffs can be absolutely brutal.

So, what does all this have to do with Kevin Warsh?

Warsh is President Donald Trump’s pick to be the next chair of the U.S. Federal Reserve, and he’s been a controversial choice to say the least. Warsh just managed to scrape by in his Senate confirmation hearing last week, and now every investor is asking the same question: Are we heading for another big Fed transition shakeup?

More importantly, what can you do to insulate yourself from the knock-on effects of that shakeup?

Why Markets Struggle During Fed Leadership Changes

The sole purpose of the Federal Reserve is to provide us with continuity. Chairs may change, but the institution itself is always stable. So, why would a change in leadership affect markets?

Unfortunately, every Fed chair brings their own philosophy and communication style to the table. They’ve got a different appetite for risk, tolerance for inflation, and unique views on unemployment. That means it can take markets years trying to adapt to one person’s policy framework, only to have the carpet ripped out from under them when some new guy waltzes in with new rules.

The prospect of new rules terrifies traders because modern markets rely so heavily on predictable monetary policy. Nowadays, just about every major asset class reacts more aggressively when it comes to liquidity conditions and interest rates — so when investors don’t fully understand how the Fed is going to behave, volatility spikes.

Crypto traders get particularly on edge when this happens. Bitcoin (BTCUSD) dropped 83% in value after Janet Yellen took over the Fed in 2014. Another 73% of its value was wiped out when Jerome Powell was appointed in 2018, and Bitcoin fell 61% when he was reappointed in 2022.