Bitcoin Falls as Hawkish Fed Raises Rate-Hike Odds
Bitcoin fell below $77,000 after Federal Reserve Chair Kevin Warsh delivered a hawkish Jackson Hole speech, extending an earlier decline below $80,000. BTC had recently rallied from under $65,000 to above $81,000 before losing about $3,000 within hours.
Warsh said US inflation remains too high for the Federal Reserve to declare victory. The preferred PCE inflation gauge stood at 3.7% year on year, while its six-month annualised rate was 4.1%, both above the Fed’s 2% target. He also pointed to strong business investment, a 20% rise in the S&P 500, unemployment near 4% and relatively easy credit conditions.
Market pricing cited by Reuters showed the probability of a September rate hike rising from roughly 35% to nearly 60%. Treasury yields and the US dollar strengthened, pressuring Bitcoin, stocks, precious metals and altcoins. The move also triggered about $488 million in crypto liquidations, mainly from leveraged long positions.
Bitcoin remains highly sensitive to Fed policy, interest rates, bond yields and dollar strength. Persistent rate-hike expectations could cap BTC’s recovery and increase volatility. Softer inflation, lower yields or a sustained move above $80,000 could improve risk appetite. Traders should monitor US inflation data and further Fed guidance.
Bearish
The immediate impact on Bitcoin is bearish. Warsh’s comments increased expectations of a September rate hike, lifting Treasury yields and the US dollar. Higher yields raise the opportunity cost of holding non-yielding assets such as Bitcoin and typically reduce demand for leveraged risk positions. The resulting sell-off pushed BTC below $77,000 and contributed to about $488 million in crypto liquidations, intensifying short-term volatility.
In the short term, Bitcoin may remain under pressure if inflation data stays elevated or other Fed officials support a tighter policy stance. A sustained break below recent support could prompt further liquidations, while a recovery above $80,000 would be an important signal that buyers are regaining control.
The longer-term outlook is less definitive. Falling inflation, weaker yields or a more dovish Fed could restore liquidity and risk appetite. However, until those conditions emerge, restrictive monetary policy and strong dollar conditions create a negative backdrop for BTC.