[ET Net News Agency, 02 February 2026] US President Trump has nominated former Federal
Reserve Governor Kevin Warsh to succeed Jerome Powell as the next Fed Chair. Although the
pick was not a complete surprise, markets were slow to react before growing concerned
about Warsh's well-known hawkish stance. This triggered a sharp sell-off in precious
metals and cryptocurrencies, with US equities turning soft. Index futures declined further
in after-hours trading, weighing on Asia-Pacific markets. Shortly after opening, the Hang
Seng Index (HSI) slipped below 27,000, as Mainland China telco, oil, and gold stocks led
declines. By midday, the HSI had fallen 656 points, or 2.4%, to 26,730, with main board
turnover over HKD 178.1 billion. The Hang Seng China Enterprises Index lost 252 points, or
2.7%, to 9,064. The Hang Seng Tech Index dropped 210 points, or 3.7%, to 5,508.

"Mak Ka Ka: Lunar New Year should provide a floor for HSI"

The HSI breached the key 27,000 mark in morning trade, hitting a session low of 26,831.
Mak Ka Ka, Head of Financial Products Trading and Research Department of SinoPac
Securities (Asia), told ET Net News Agency that after a strong rally, the HSI showed
overbought signs, so the current pullback is a normal technical correction, not a
structural reversal. She expects near-term downward pressure to continue; however, with
the Lunar New Year approaching, China's overall policy environment is expected to remain
stable, which should provide some support for the HSI at lower levels. Short term, she
identifies 26,600 as initial support and 27,200 as resistance, anticipating range-bound
trading around these levels.
Regarding Warsh's nomination as the next Fed Chair, Mak noted that Warsh previously
served as a Fed Governor and is considered hawkish, consistently cautious on quantitative
easing and excessive balance sheet expansion. She expects Warsh to continue with rate cuts
alongside balance sheet reduction. While the rate cut trend remains intact and is not
expected to fundamentally change market direction, quantitative tightening will result in
tighter US dollar liquidity, putting pressure on high-risk assets like Bitcoin.

"Crypto market sentiment shifts from optimism to risk management"

Warsh's hawkish appointment also impacted the crypto market, with Bitcoin sliding below
USD 80,000, briefly touching USD 75,700, and continuing its slide in Asian trading hours
to as low as USD 74,604. Mak observed that Bitcoin had been highly leveraged; with balance
sheet reduction, deleveraging could trigger further volatility. She also pointed out that
US spot Bitcoin ETF flows have shifted from strong inflows to profit-taking, signalling a
shift in market sentiment from optimism to risk management. On the medium-to-long-term
outlook for Bitcoin, Mak remains neutral, suggesting investors cautiously adjust their
positions and reduce leverage.
For the short term, Mak expects Bitcoin could fall to around the USD 70,000 mark, as it
enters oversold territory. While a short-term rebound is not ruled out, the USD 80,000
level will be a significant psychological resistance above.