Markets are enduring a bruising sell-off: uncertainty over next Federal Reserve chair collide with super-fragile sentiment.
Lark Davis, a popular crypto market observer, spent the weekend watching what he called an “absolutely off a freaking cliff” move in digital assets, arguing that a mix of geopolitical jitters, U.S. banking stress and confusion over the next Federal Reserve chair have combined into a punishing — but potentially temporary — flush.
Bitcoin, he noted, has now shed nearly $30,000 from the point where it lost its 50‑week exponential moving average around $100,000, a level he marks as the start of the current bear trend. “We are in a bear market” Lark said, adding that the latest leg down pushed the daily RSI to about 23 — an oversold reading he compared to November’s washout that preceded a sharp relief rally.
Fed Chair Pick Seen As Surprisingly Crypto-Friendly
The host devoted significant attention to Kevin Warsh, described as the incoming Fed chair and widely labeled a monetary hawk. Some traders have reacted bearishly, fearing tighter policy and weaker growth, but he leaned on comments from veteran investor Stan Druckenmiller to push back on that view.
Druckenmiller, Davis noted, has framed Warsh as “very open-minded” and aligned with the Greenspan-era playbook of the 1990s tech boom, expecting the AI cycle to be even bigger than the internet.
Warsh is also portrayed as “an excellent pro-crypto pick,” with Electric Capital staff highlighting his direct investing in crypto, fintech and AI and his previous Fed experience. “Think about that,” the analyst said. “We got somebody who’s an actual crypto investor now running the Fed” when he eventually replaces Jerome Powell.
Bank Liquidations Hit On PMI Surprise & Metals Whipsaw
Beyond the Fed, Lark Davis flagged at least three small U.S. banks reportedly wiped out over the weekend, including Metropolitan Capital Bank in Chicago and Independence Bank in Detroit. The commentator stressed these are “not Bank of America or JPMorgan” arguing that social media doom about a cascading systemic collapse looks overblown for now.
He instead focused on macro data he thinks could flip risk sentiment. Chicago’s regional PMI for manufacturing “exploded” to 54 versus estimates around 44 after roughly two years of contraction, and he suggested this may foreshadow the national ISM manufacturing index breaking back above 50.
That shift would, in his view, mark “step number one into the new business cycle” historically associated with 12-18 months of rising asset prices.
Safe-haven metals did not escape the turbulence. Gold fell as much as 21% from its recent all‑time high before bouncing, triggering a profitable take‑profit on the host’s short. A looming bearish MACD crossover on the daily chart led him to expect “a cool‑off period” rather than a structural top.
Bitcoin’s CME Gap, Wyckoff’s Spring & The ETF Overhang
On the crypto side, Lark pointed to a “massive” upside CME gap for Bitcoin between $78,000 and $84,000 — described as the second-largest ever — and reminded viewers that such gaps “usually get filled,” though often not immediately. A Wyckoff accumulation schematic was overlaid on recent price action, with the latest plunge cast as a potential “spring” phase, provided the bleeding stops soon.
He also compared Bitcoin’s current pattern to prior setups in Google and Nvidia, where an initial low, then a smaller rally, then a marginally lower low preceded strong advances. Weekly, Bitcoin has now twice retested the ~$74,000 area that capped the market in March and June 2024. A deeper dip toward the 200‑week EMA around $68,000 remains on his radar as a possible — if painful — support.
Ether and Solana “got slaughtered” alongside Bitcoin, with ETH losing over $1,000 from a mid‑January retest of the 200‑day EMA and sliding to roughly $2,150. Solana (SOL) showed an emerging bullish MACD crossover and RSI breakout on the four-hour chart; the host disclosed a tight-stopped long targeting about $114 (the four‑hour 50‑EMA and prior support-turned-resistance), while warning he could be stopped out quickly.
One near-term risk, Davis argued, is U.S. ETF holders waking up to heavy weekend losses and “nuking their Bitcoin, Ethereum, Solana ETF bags” at the Wall Street open. He is running tight stops on longs, but allowed that if ETF flows turn net positive instead, “prices are attractive” and a relief bounce could accelerate.
Notably, some smaller altcoins looked relatively resilient. Lark Davis cited meme and niche tokens such as PUMP, PENGU and PEPE as having sold off less than majors and, in at least one case (Canton), even notching new highs amid the chaos — a reminder that dispersion remains high even within a broadly risk-off tape.
For investors, the message was blunt: the market is firmly in bear territory, and macro uncertainty — from Iran tensions to regional bank failures to a new Fed chair — is amplifying volatility. Yet deeply oversold readings, a sizable CME gap overhead, and early signs of an improving manufacturing cycle give traders some data-backed reasons to watch for relief rallies rather than writing off the entire cycle.
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