Bitcoin fell below $80,000 on August 28 after Federal Reserve Chair Kevin Warsh used his Jackson Hole keynote address to emphasize that inflation remains a primary focus for the central bank. The cryptocurrency later stabilized in the $79,000 to $79,500 range, with the intraday weakness triggering nearly $488 million in crypto liquidations.
Warsh highlighted that the Fed's preferred inflation measure, the Personal Consumption Expenditures gauge, stood at 3.7% year-over-year, nearly double the central bank's 2% target. Over the previous six months, the annualized reading was 4.1%, suggesting price pressures are re-accelerating.
"We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do," Warsh said.
His remarks sparked an immediate market reaction. Treasury yields climbed and the probability of a September rate hike jumped from approximately 35% to between 50% and 60%. The rapid shift in rate expectations caught leveraged traders off guard, with nearly all $488 million in liquidations occurring on the long side.
Bitcoin's intraday low reached the $77,800 to $78,600 range before recovering to the $79,000 to $79,500 level within hours as buyers re-entered the market.
Warsh has publicly acknowledged Bitcoin as both a market signal and an alternative asset. While he has called Bitcoin an "important asset" that can serve as a check on monetary policy, he has also noted that its volatility limits its practical use as a currency.
