Warren Urges Treasury and Fed to Disavow Any Bitcoin Rescue as BTC Slides 50%

Bitcoin’s sharp retracement has collided with Washington’s risk perimeter. With BTC down roughly 50% from its October peak and trading just under $67,000 today (off 0.4%), Senator Elizabeth Warren is pushing the Treasury Department and the Federal Reserve to make explicit what many assume: no taxpayer-funded lifeline for Bitcoin or crypto firms.

In a letter to Treasury Secretary Scott Bessent and Fed Chair Jerome Powell, Warren pressed the agencies to avoid “propping up” Bitcoin through any direct purchases, guarantees, or liquidity facilities. She argued it remains “deeply unclear” whether the government plans to intervene in the current selloff, even though both agencies possess crisis-era tools to support banks and certain entities during market stress. Warren’s contention is straightforward: a bailout would skew toward wealthy insiders, risk transferring public funds to “cryptocurrency billionaires,” and, given linkages, could enrich President Donald Trump and his family through their association with DeFi venture World Liberty Financial.

Her case landed amid a leverage washout. The drawdown, she said, has been exacerbated by cascading liquidations of leveraged positions—a dynamic that continues to rattle investors and companies exposed to BTC. Prediction markets are leaning cautious: on Myriad, users see a 64% probability of a further leg lower toward $55,000.

Warren pointed to on-chain maneuvers as real-time evidence of risk. World Liberty Financial, she said, sold about 173 wrapped Bitcoin to repay $11.75 million in USDC stablecoin debt, sidestepping liquidation as prices slipped below $63,000. She also cited losses among prominent investors and executives as symptomatic of concentrated, leveraged exposure across the market.

The political backdrop is evolving. Since Trump’s return to power, some states have floated “strategic Bitcoin reserves,” lawmakers have suggested allowing BTC in select public pension portfolios, and federal agencies have inched pro-digital asset initiatives toward deeper financial integration. Yet at a House Financial Services Committee hearing on February 4, Bessent pushed back on chatter of a federal strategic Bitcoin reserve, saying the government lacks legal authority to support or “bail out” Bitcoin with public funds. He noted Treasury is “retaining seized Bitcoin,” but indicated there is no mechanism to direct banks to buy BTC or to deploy public funds to stabilize the market.

Warren’s broader posture hasn’t softened. On February 9, she reiterated that recent volatility reinforces her call for “ordinary, commonsense consumer protections,” warning that without “cops on the beat,” insiders—including Trump and his family—can safeguard themselves while shifting losses onto small traders or retirees. Few in markets will disagree that unsophisticated capital tends to arrive late and exit worst.

What matters most here is the boundary-setting. An explicit no-backstop stance changes behavior. If participants believe there is zero chance of a sovereign put under Bitcoin, funding markets tend to reprice leverage more soberly. Prime brokers and lenders may tighten collateral schedules, haircut wrapped assets more aggressively, and demand better transparency on stablecoin liabilities. DeFi liquidators will keep doing what code demands—sell to protect solvency—but centralized lenders and market makers could throttle credit earlier, dampening the size of liquidation cascades. That is healthier than learning at the cliff’s edge.

For institutions with BTC on balance sheets or wrapped into structured products, the message is discipline: hedge basis, manage VaR in real time, and assume liquidity thins fastest precisely when you need it. For miners and corporates with high-beta exposure, a world with no policy safety net argues for lower gross leverage and more resilient treasury practices. And as states and pensions consider Bitcoin allocations, the absence of a federal rescue increases the onus on fiduciaries to document risk, stress test collateral chains, and pre-commit liquidation protocols that won’t rely on political intervention.

There’s also a fairness component. If taxpayers never underwrite equity risk in a non-sovereign asset, there is less room for perceived favoritism—particularly when political figures have ties to crypto ventures. Clear lines reduce cynicism and, over time, should improve the quality of capital that remains in the ecosystem. Markets that price risk without assumed bailouts tend to experience sharper drawdowns but sturdier recoveries.

Investors will debate timing and trajectory. But if Washington’s signal holds—Treasury retaining seized BTC while declining any stabilizing role—participants should expect more self-insurance and fewer moral hazard tailwinds. In crypto, that usually means less leverage, better collateral, and a market that learns to breathe without a state-provided oxygen tank.