Daily Vecsignal - Better With Powell: 2021 Crash Analyst Issues Chilling Warning to Crypto Markets

 May 01, 2026 | VECS News

Benjamin Cowen, the cryptocurrency analyst who correctly predicted the 2021 market crash, has issued a stark warning to investors celebrating Jerome Powell's departure from the Federal Reserve chairmanship . In a series of posts on X following the April 29 FOMC meeting, Cowen drew a direct parallel between Powell's exit and the departure of former SEC Chair Gary Gensler in January 2025. When Gensler left, Cowen argued, crypto markets did not experience liberation. Instead they entered what he called "the grifting age" where influencers and politicians launched memecoins and rug-pulled followers daily without fear of repercussion, draining liquidity from the industry into worthless assets .

The numbers tell a sobering story. When Gensler departed in January 2025, Bitcoin was trading at approximately 

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109,000.BythetimePowellchairedhisfinalFOMCmeetingonApril292026,Bitcoinhadfallentoroughly75,000, a decline of more than 30 percent . Cowen's argument is not complicated. The removal of regulatory accountability did not free crypto markets. It removed the consequences for bad actors, and the market paid the price. "Now that people celebrate Powell's removal as chair of the Federal Reserve," Cowen wrote, "it makes me think history will repeat itself once again" .

Powell's final FOMC meeting on April 29 delivered exactly what markets expected. The Federal Reserve held its benchmark interest rate unchanged for the third consecutive time, maintaining the target range at 3.50 percent to 3.75 percent . But the real news came from Powell himself. The outgoing chair announced that he would remain on the Board of Governors until at least January 2028, breaking nearly 80 years of tradition. "I had long planned to be retiring," Powell said. "The things that have happened really in the last three months have, I think, left me no choice but to stay until I see them through at least that long" .

Powell's decision to stay as a Governor has profound implications for crypto markets that most investors have missed. As a Governor he keeps a permanent FOMC vote and retains supervisory authority over Fed Master Account decisions, large-bank crypto custody policy, and the implementation of stablecoin oversight under the GENIUS Act . This portfolio matters more for crypto market structure than the headline interest rate. Powell already used it to remove "reputational risk" as grounds for denying master accounts to crypto-adjacent banks, a policy shift that meaningfully opened banking access for the industry .

The market reaction to the FOMC meeting was immediate and revealing. Bitcoin fell roughly 2 percent to $76,000 within hours of Powell's announcement. According to CME FedWatch data, the market-implied probability of a 2026 rate cut collapsed from approximately 25 percent to just 1 percent . Ethereum and Solana each fell more than Bitcoin. The narrative that a "crypto-literate" successor would deliver an immediate liquidity gift proved demonstrably wrong. The market repriced inside a single press conference, and it repriced downward .

Kevin Warsh, Trump's nominee who has already cleared the Senate Banking Committee, is set to succeed Powell as chair on May 15. Warsh has disclosed more than $100 million in crypto holdings across Bitwise, Electric Capital, Polychain, Solana, Optimism, and other digital asset ventures . Crypto Twitter has spent months pricing this as a bullish tailwind. But Cowen and other analysts are warning that the celebration is premature. Warsh's stated framework is "practical monetarism," meaning faster balance-sheet runoff rather than the lower policy rate that Trump publicly demands . Liquidity, not Bitcoin endorsements, is what moves crypto markets.

FinanceFeeds analysts have outlined the structural reality that personality coverage has buried. Powell's tenure quietly delivered meaningful wins for the crypto industry that are now at risk of being forgotten. In June 2025, the Fed under Powell affirmed that U.S. banks are free to provide services to cryptocurrency companies so long as they follow established risk management standards. The Fed simultaneously removed "reputational risk" from its bank supervision framework, a long-standing barrier that had allowed examiners to deny banking access to crypto firms on vague subjective grounds . These institutional choices outlast a single chairmanship, but only if the institutional credibility remains intact.

Turkish crypto commentator Cihan0x.ETH extended Cowen's logic further, noting that rate cuts are no longer expected any time soon regardless of who chairs the Fed. The timeline has shifted from 2026 expectations to potentially 2027, driven primarily by energy-side inflation from geopolitical tensions rather than demand-side factors . The war in Iran has kept global energy prices elevated, and the Fed's own statement cited "the recent increase in global energy prices" as a contributing factor to persistent inflation. That kind of inflation gives the Fed less room to act, not more, regardless of who holds the gavel .

The broader expert consensus is measured but carries an undercurrent of concern. Bloomberg Intelligence Senior Commodities Strategist Mike McGlone warned separately that cryptocurrency markets could face a serious crash, describing the current market situation as a "classic pump and dump" . McGlone noted that Bitcoin's performance has been "terrible" since ETF launches and that millions of tokens in the market represent nothing while being worth billions of dollars. "The big liquidation has only just begun," he said . For investors already unsettled by Cowen's Powell-Gensler comparison, McGlone's words add another layer of caution.

The bottom line for crypto investors is a fundamental question about institutional credibility. Cowen's warning is not merely about crypto prices. It is about whether the Federal Reserve loses its independence and becomes what he called "another cabinet of the executive branch" . If that happens, it risks eroding the trust that underpins the entire financial system, not just crypto markets. "Perhaps many will look back in a few years and realize that markets were better off with Powell than without him," Cowen said . For investors navigating the transition from Powell to Warsh, the question is whether they will be among those who heed the warning or those who learn the lesson the hard way.