Don't want to trade it yourself?
Our desk runs DEX portfolios on profit share.
Key Facts
- Fed Chair Kevin Warsh struck a hawkish tone on inflation at the Jackson Hole symposium on Friday, though he stopped short of committing to a rate hike.
- <a href="https://xpertsstudio.com/bitcoin-nears-81000-as-fed-meeting-and-crypto-regulation-loom/” title=”Bitcoin nears $81,000 as Fed meeting and crypto regulation loom”>Bitcoin fell from around $80,000 to below $77,000 after the speech before recovering to about $78,000, while prediction markets swung to narrowly favor a rate hike.
- Analysts including Charles Schwab’s Jim Ferraioli said a hawkish Fed puts the “debasement trade” behind Bitcoin’s recent surge back in check.
US Federal Reserve Chair Kevin Warsh delivered a hawkish message on inflation at the Jackson Hole symposium on Friday, prompting increased expectations that the Fed will hike interest rates and sending Bitcoin’s (BTC) price down.
Bitcoin was trading around $79,500 when Warsh began speaking at 14:00 UTC. After the speech, it briefly fell below $77,000, hitting a 24-hour low of about $76,900, before recovering to around $78,000 — down roughly 3.4% over 24 hours —
Warsh, marking his 100th day as chair, said the Fed’s “predominant focus right now should be on prices” as inflation runs above the central bank’s 2% target. But he pointedly declined to signal the next move.
“I stand here today committed to a discipline, not to a decision,” he said in his keynote, adding that he would be “hard pressed to describe broad financial conditions as restrictive.”
Markets still read the remarks as a lean toward tighter policy. On prediction market Polymarket, the chance of a September rate hike moved narrowly ahead of no change after having trailed behind all week. Charles Schwab’s Cooper Howard, director of fixed income research and strategy for the Schwab Center for Financial Research, called the odds “about a coin flip.”
What a Hawkish Fed Means for Bitcoin
Rate hikes are generally seen as bearish for Bitcoin, and crypto has dipped on hike fears before. This is because higher interest rates make yield-bearing bonds more attractive and tend to pull liquidity away from risk assets such as Bitcoin.
Scott Melker, known as “The Wolf Of All Streets,” said the market had expected Warsh to “follow in his buddy Bessent’s path” and ease policy to support the Treasury. Instead, Melker said, Warsh chose to “come in hawkish and say we have a strong economy and inflation is still a problem.”
Jim Ferraioli, Charles Schwab’s director of crypto research and strategy, said the past week had seen a “rebirth of the debasement trade,” the rotation into scarce stores of value like gold and Bitcoin, and that Warsh’s tone put that narrative “back into check.” He called the pullback muted and tied the restraint to a positioning reset after a short squeeze last week that left the market less leveraged.
“Liquidations of levered futures typically can explain 50% of Bitcoin’s daily price move,” he said. So, with positioning reset, there was “less fuel for the fire.”
Still, tighter Fed policy may not be the whole liquidity story. As CoinMarketCap recently reported, the US Treasury’s expanded bond buybacks could add liquidity to markets even if the Fed holds or raises rates, a potential counterweight to a hawkish central bank.
Read More:Rate Hikes and the Fed: How Do They Affect Crypto Markets?
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice. The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
Source: coinmarketcap.com