Bitcoin Drops 3% as Warsh Speech Boosts Fed Hike Odds to 57%
Bitcoin dropped by 3% to trade at $77,000 following a hawkish speech by Federal Reserve Chair Kevin Warsh during the Jackson Hole event, according to a report by ambcrypto.com. Warsh signaled that the central bank is far from finished fighting inflation, noting that recent Consumer Price Index and Personal Consumption Expenditures readings do not conclusively prove that underlying trends have meaningfully improved.
U.S. equities and digital asset markets reacted negatively to the remarks. The tech heavy Nasdaq fell 0.52%, the S&P 500 declined 0.25%, and Bitcoin led a wider crypto market retreat. Prior to the speech, Bitcoin had rallied 30% during the second half of August, aided by the U.S. Treasury’s planned $1 trillion intervention to curb rising bond yields. That upward momentum allowed the asset to reclaim its crucial 200-day Moving Average, although the rally subsequently stalled below the $80,000 threshold.
Following Warsh’s commentary, interest rate traders repriced the probability of a September Federal Reserve rate hike to 57%, representing a 20% increase from the prior week. Institutional options markets reflected similar caution. The Bitcoin 25 Delta Skew climbed from negative 10% to nearly 5%, indicating renewed demand for downside protection after traders had previously unwound their hedges during the recent fiscal debasement trade narrative.
Analyst Luke Gromen suggested that ongoing bond market crises could ultimately overshadow short-term Federal Reserve rate decisions. If rate hike fears deepen market sentiment, analysts warn that Bitcoin prices could retrace toward the 200-day Moving Average near $69,300. Conversely, if the debasement trade narrative regains momentum, bulls may attempt to turn the $80,000 level into support for the next leg of the uptrend.
Based on reporting by ambcrypto.com.
