The faucet is about to be turned on: who will take over the Federal Reserve and decide the next round of the crypto market?

2026 is the year of power transition in the cryptocurrency market. The current Federal Reserve Chair Powell’s term will end in May, and a life-and-death “turning the tap” in the crypto world is about to unfold. If we compare global funds to a massive water reservoir, cryptocurrencies like Bitcoin, Ethereum, Solana, and others are the small boats inside the pool. The Fed Chair is like the person controlling the tap—deciding how much water to let out, directly affecting the thickness of your wallet.

Today, we won’t discuss technical analysis or look at candlestick charts. Instead, we’ll delve into how this power shift will reshape the crypto landscape.

Three Types of Gatekeepers of the Tap: A Full Analysis of Candidate Styles

Inside Wall Street, there are several hottest “successor” candidates. Based on current market news and the trends of the Trump team, there are mainly three types of candidates, representing completely different economic philosophies.

Type One: Dovish Watering Theory — The Favorite Script in Crypto

Representative: Kevin Hassett

Unique Identity: Former Chief Economic Advisor to Trump, a true “insider.” Naturally close to the White House.

Governing Style: Extremely obedient to Trump, who favors low interest rates, rising stock markets, and rapid economic growth. If Hassett is elected, he will likely align with White House policies, maintaining loose monetary policy even if inflation is slightly high.

Impact on the crypto world: Green light.

Loose policies mean the market is flooded with cheap hot money. This money prefers to flow into high-risk assets—digital assets like Bitcoin and Ethereum. Currently, BTC is around $83,170, ETH at $2,650. If the tap is turned further, these numbers could break higher. If Hassett controls the tap, the bull market will accelerate.

Type Two: Hawkish Reform Theory — Short-term Pain, Long-term Bull

Representative: Kevin Warsh

Unique Identity: Former Fed Governor, Wall Street darling, a “hardliner” who understands both economics and politics.

Governing Style: He has publicly criticized the Fed for “printing too much money” and advocates for a Strategic Reset. He believes that money printing should not be bottomless just to save the stock market. He is a principled technocrat.

Impact on the crypto world: Yellow warning—short-term pain, long-term benefits.

Initially, Warsh might tighten monetary policy to assert authority and even clear bubbles caused by excessive liquidity. This could lead to short-term declines in crypto, with newcomers experiencing a “hellish” market. But Warsh is well-versed in financial innovation and supports CBDC frameworks, possibly being more friendly to stablecoin regulation. After enduring the initial pain, institutional funds will enter, bringing a truly long bull—more stable and transparent.

Type Three: Black Swan — The True Crazy Gamble

Representative: Judy Shelton

Unique Identity: A staunch supporter of the gold standard, even questioning the necessity of the Fed.

Governing Style: Shockingly radical. She advocates for tying currency to gold (Sound Money), which would cause severe turbulence in the dollar system.

Impact on the crypto world: Uncertain red/green—extreme volatility.

If she takes office, the dollar system itself will face an uncertainty crisis. In this scenario, Bitcoin as “digital gold” will instantly explode in its safe-haven narrative, causing prices to skyrocket. But the cost could be a stock market crash and a collapse of the entire crypto market. This is an “win-lose” extreme situation.

Historical Lesson: Changing a Person, Bitcoin Dropped from 69K to 15K

To help you understand the power of “turning the tap,” let’s review a bloody historical case.

Background: The Crazy Era of 2020-2021

During the pandemic, the Fed flooded the market with money. Bitcoin soared from $3,000 to $69,000. Everyone believed it would reach $100,000 or higher. The market was full of optimism.

Turning Point: Powell Suddenly Reverses in Late 2021

Powell later admitted that his initial “transient inflation” judgment was completely wrong. Inflation spiraled out of control. To fix this, in 2022, he launched the most violent rate hike cycle in history—rapid hikes, balance sheet reduction, tightening liquidity.

Result: The Tap Was Shut Off Instantly

Bitcoin plummeted from $69,000 to $15,000. Ethereum dropped from $4,900 to $800. Countless retail investors were trapped at high prices; Luna, FTX, and other institutions collapsed due to liquidity crises. How damaging was this policy change (not just the person change)? Bitcoin lost 75% of its value.

Lesson: Liquidity Is Everything

Markets don’t look at fundamentals, only at capital flows. No matter how advanced Bitcoin’s technology or how perfect its ecosystem, when the Fed decides to tighten, prices will fall. That’s why the “water tap” change in May 2026 is crucial—it directly determines the liquidity environment for the next 2-3 years.

Certainty Trend: No Matter Who Changes, the Money Printing Machine Will Activate

Regardless of who ultimately becomes Fed Chair, there’s a macro background that remains unchanged. This is the “certainty” we must grasp.

US Debt Trap: Rate Cuts and Liquidity Injection Are Inevitable

US debt is already sky-high. If the Fed maintains high interest rates, the US government won’t even be able to pay interest, risking a debt crisis. Therefore, whether it’s a dovish, hawkish, or black swan candidate, they will ultimately move toward rate cuts and liquidity easing—to dilute debt through inflation.

What does this mean? In the long run (2-3 years), the dollar will depreciate. Bitcoin, as an inflation hedge and hard asset, will trend upward. This is macro certainty.

Open Regulation: Signal of Trillions of Institutional Funds Entering

If Warsh or Hassett takes office, they are more friendly to financial innovation than the current government. It is plausible that banks will be allowed to directly custody Bitcoin, and stablecoins (USDT, USDC) will gain official legitimacy. This will open the gates for the crypto world, attracting trillions of institutional capital.

Currently, Solana ($115.88) and Ethereum ($2,650) are still relatively low. Once regulation clarifies, liquidity floods in, and these assets will experience explosive growth.

Practical Strategies: How to Survive Before and After the Water Tap Switch

After reading the above analysis, as an investor, what should you do now?

Step One: Monitor the Fed’s “Dot Plot”

Don’t just read headlines. Every FOMC meeting releases a dot plot predicting future interest rates. If the dot plot shows rates going down, it’s a bold buy signal.

Step Two: Keep an Eye on the 10-Year US Treasury Yield

This is an inverse indicator. Rising yields → capital flows to banks → crypto declines; falling yields → capital seeking higher returns → crypto rises. When yields start to decline, it’s the best time to position.

Step Three: Be Cautious During the Power Transition Period

March-May 2026 is a sensitive period for power transfer. Rumors (FUD) will flood the market, and prices will fluctuate wildly. High-leverage traders will suffer heavy losses. Spot investors should adopt a “stay calm” strategy.

Allocation Suggestions: Balance Between Stability and Aggression

• 60% Bitcoin (BTC): The most direct indicator of Fed policy, the most stable. Current price at $83,170 is relatively safe.
• 30% Quality Public Chains (SOL, ETH): The biggest beneficiaries of liquidity overflow. Solana at $115.88, Ethereum at $2,650 have upward potential.
• 10% Stablecoins (USDT): As dry powder for dips. If a new chair takes office and markets show a “downward shock,” this 10% will be your bargain ammunition.

Conclusion: Power Transition Is Wealth Reallocation

Essentially, the change of Fed Chair in 2026 is a game between “Trump Economics” and “Traditional Financial Order.”

If Hassett wins: straightforward and aggressive, accelerating the bull market, great for beginners.

If Warsh wins: buckle up, expect turbulence before takeoff—this is the real investor’s game.

If Shelton wins: who knows what will happen, but Bitcoin will become the ultimate hedge.

As an ordinary investor, you don’t need to predict who will win precisely. Just remember one simple fact: as long as the US debt crisis isn’t resolved, no matter how the tap is turned, the ultimate direction points to the same place—the printing press will keep running, and that is the only fuel for Bitcoin to reach $100,000+.

The water tap change doesn’t alter the endgame; it only affects the pace at which we reach it.