Bitcoin fell 3% to $77,000 following comments from Fed Chair Kevin Warsh at the Jackson Hole economic conference. In his speech, Warsh indicated the Federal Reserve was not finished addressing inflation, stating that while recent summer PCE and CPI readings came in better than expected, underlying inflation trends had not meaningfully improved.
U.S. equity markets and cryptocurrency assets interpreted Warsh's remarks as hawkish. The Nasdaq declined 0.52%, while the S&P 500 fell 0.25%. Bitcoin's 3% drop aligned with broader market weakness across risk assets.
The decline stalled Bitcoin's recent rally, which had gained 30% in the latter half of August. The cryptocurrency had reclaimed its 200-day moving average but remained unable to reach the 50-week moving average at $81,800, a level analysts consider significant for confirming the end of the bear market cycle.
Following Warsh's speech, interest rate traders repriced the probability of a September Federal Reserve rate hike to 57%, representing a 20 percentage point increase from the previous week. Options traders also moved to increase downside protection, with the Bitcoin 25 Delta Skew rising from -10% to approximately 5%.
Analyst Luke Gromen suggested that bond market dynamics may prove more influential than Fed decisions in the near term. If rate hike concerns deepen, Bitcoin could potentially retrace toward its 200-day moving average at $69,300. Conversely, if the narrative around currency debasement and fiscal concerns continues to dominate, the $80,000 level could serve as support for further upside movement.
