BTC Falls Below $77K After Hawkish Warsh Speech Strengthens Dollar

Bitcoin fell below $77,000 after Federal Reserve Chair Kevin Warsh used his Jackson Hole speech to reinforce the possibility of further interest-rate increases if inflation remains stubbornly above target.

The move reversed part of Bitcoin’s recent rally toward $80,000 and came as traders rapidly repriced the September Fed meeting. Rate futures pushed the probability of a 25-basis-point hike to 55.7%, up from 35.4% before Warsh spoke, according to Reuters.

Warsh did not commit to a hike, but he said the Fed would still have “work to do” unless inflation moves convincingly toward its 2% target. July PCE inflation stood at 3.7%, leaving policymakers with limited room to declare victory over price pressures.

Higher Yields Pressure Bitcoin

The clearest market reaction appeared in short-term bonds.

The 2-year Treasury yield rose to about 4.31%, while the U.S. dollar strengthened after the speech. Higher yields increase the return available on relatively low-risk government debt, which can reduce the appeal of non-yielding and higher-volatility assets such as Bitcoin.

That is almost the opposite environment that supported BTC earlier in August. Bitcoin had rallied toward $79,500 after Treasury bond-buyback measures helped ease long-term yields, while institutional demand strengthened. Coinpaper’s earlier BTC rally coverage showed weekly spot ETF inflows reaching roughly $1.9 billion during that rebound.