Bitcoin fell to $76,877 on Friday, retreating from an overnight high of $81,455 after Fed Chair Kevin Warsh's Jackson Hole keynote indicated inflation is not cooling fast enough. The drop saw Bitcoin give up most of its weekly gains and confirmed a technical resistance zone that had capped several previous breakout attempts this year.
In his keynote marking his 100th day as Fed Chair, Warsh set a condition for future policy: the Federal Reserve needs to see inflation moving toward its 2% target clearly and at sufficient speed before declaring the job complete. He stated the central bank still has "work to do" on inflation, a tone traders interpreted as hawkish.
Market reaction was immediate. September rate-hike odds jumped to 55.7% from 35.4% the previous day, according to CME Group's FedWatch tool. Leveraged positions unwound sharply, with roughly $481 million in liquidations across the crypto market in the 24 hours surrounding the speech, including more than $360 million from long positions. Bitcoin closed the day at $77,557, down 3.39%.
Technical Outlook
From a technical perspective, the pullback appears to reflect consolidation rather than a trend reversal. The Relative Strength Index sits at 69.7, well below the overbought threshold of 80, while the Average Directional Index near 39.5 still indicates a strong underlying trend. Bitcoin remains inside the bullish price leg that extends from the June low near $68,858 to this week's high near $81,455.
The $73,670 to $75,157 band represents a key support level traders are monitoring. If selling pressure extends into that zone, it could test the 50-week moving average and June breakout structure. Above the market, the $81,000 to $82,500 range remains the critical level bulls need to reclaim for new highs.
Long-Term Sentiment Remains Bullish
Despite Friday's rejection at resistance, long-term trader positioning suggests continued optimism. The Myriad "BTC next move" prediction market, active since late February with $231,000 traded, shows the $84,000 outcome at 77% probability against 23% for a $55,000 scenario. This bullish tilt matches sentiment levels last seen near April and has remained largely unchanged by Friday's selloff.
Fundamental demand indicators support the longer-term bullish case. U.S. spot Bitcoin ETFs attracted $2.8 billion over eight consecutive days of inflows through Wednesday, marking the longest streak since April. This demand stems partly from a Treasury Department announcement to at least double long-dated bond buybacks beginning September 9, which has supported lower long-end yields and a softer dollar—conditions that fueled Bitcoin's climb from approximately $62,000 to $80,000 this month.
Warsh's remarks left this backdrop unchanged, as he set no explicit rate path and merely flagged a condition the Fed has not yet met. The PCE price index remains at 3.7% annually, nearly double the Fed's 2% target.
Near-Term Risks
Short-term caution remains warranted. Warsh's refusal to provide forward guidance leaves traders without clear signals until the Fed's next rate decision, exposing Bitcoin to headline-driven volatility on each inflation data release between now and that announcement. Technical resistance has rejected multiple previous tests, and the recent speech gave bulls no indication the Fed will ease pressure on the next attempt.
