Bitcoin initially declined following Federal Reserve Chair Kevin Warsh's first major speech in his role, during which he emphasized the central bank's commitment to fighting inflation. The leading cryptocurrency fell to $78,630 before recovering to trade near $79,474.
Warsh stated that inflation remained concerning despite progress on employment, saying "we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do." Following the speech, traders priced in a 50% probability of a rate hike in September.
Bitcoin typically struggles when the Federal Reserve signals a commitment to higher interest rates, as this reduces the appeal of non-yielding assets. However, the cryptocurrency appeared to shake off the immediate impact of Warsh's remarks.
Several factors supported Bitcoin's recovery. U.S. Treasury Secretary Scott Bessent announced the department would double the size of its long-dated bond buybacks, sending yields lower and weakening the dollar—developments that typically benefit non-yielding assets like bitcoin and gold.
Regulatory developments also provided support. President Donald Trump last week called the proposed Crypto Clarity Act "very, very powerful" and urged lawmakers to advance the legislation. The law would establish a framework for classifying digital assets as securities, commodities, or payment stablecoins.
The Federal Reserve Bank of Kansas City will host its annual Jackson Hole economic symposium on Friday, where policymakers and academics will discuss financial innovation in payments, including cryptocurrencies and stablecoins.
