Bitcoin fell nearly 2% to about $79,200 following Federal Reserve Chair Kevin Warsh's hawkish Jackson Hole speech, which put another rate hike on the table as inflation remains well above the Fed's 2% target. The cryptocurrency had climbed from roughly $64,000 to $80,000 in a single week before the speech, reaching the $80,000 milestone just ahead of today's crucial Jackson Hole address. Warsh said 12-month PCE inflation stands at 3.7%, while the six-month rate has reached 4.1%, with 54% of the 199 goods and services in the PCE basket recording price increases above 3% during the past 12 months. Polymarket traders raised the probability of a 2026 rate hike to 68% after the speech, up from less than 50% a week earlier, as traders raised their rate-hike bets following the hawkish message.
Federal Reserve Chair Kevin Warsh will deliver keynote remarks at the Jackson Hole Economic Policy Symposium today at 10 a.m. ET, according to the Federal Reserve's official calendar. The symposium runs from August 27 through August 29, with the Kansas City Fed selecting 'Financial Innovation: Implications for Payments and Policy' as this year's theme. Warsh's comments may clarify how he weighs persistent inflation against slower headline growth, making his speech particularly significant for market direction. Historical data from BeInCrypto shows Bitcoin's median reaction to Fed chair speeches since 2018 is a gain of 1%, with seven of eight moves falling within a 5% band. However, the 2022 speech by Jerome Powell stands out as the only move worse than 2% in eight years, with Bitcoin falling 6% in a single session from $21,518 to $20,230.
Warsh's inflation warning came alongside an upbeat assessment of the American economy, which the Fed chair said appeared to have strengthened despite pressure in housing and agriculture. Business investment in equipment and intangible assets has grown by about 9% over four quarters, its fastest pace since 2021, with more than half attributed to the artificial intelligence buildout. S&P 500 company profits have climbed by more than 20% during the past year, while corporate bond and leveraged-loan spreads remain near the lower end of their historical ranges. The unemployment rate stands at 4.1%, while the four-week average of jobless claims remains close to its lowest level in decades, according to Warsh's remarks. At the July meeting, most Federal Open Market Committee members voted to wait for more information before changing rates, even as policymakers agreed that inflation remained too high.
Bitcoin previously fell 4.1% from $81,238 to $77,870, while long liquidations reached about $270 million across the crypto market before the Jackson Hole speech. Bitcoin futures open interest dropped roughly 4.5% from the level recorded around the $81,238 peak. Warsh delivered his speech after approximately $6.4 billion in Bitcoin options expired on Deribit at 08:00 UTC on Aug. 28, clearing a large block of contracts shortly before the market reacted to his comments. The options expiry included roughly 81,700 contracts, comprising 44,639 calls and 37,061 puts, with calls outnumbering puts at a ratio of 0.83. Lacie Zhang from Bitget Wallet noted that the positioning showed constructive rather than euphoric confidence, with calls trading at higher premiums than comparable puts.
Piyush Walke, Derivatives Research Analyst at Delta Exchange, noted that BTC is consolidating around $79,280 following its strong upward move, with the broader trend remaining bullish. The price is holding above the 55-EMA and 200-MA, though the RSI near 80 might result in short-term cooldown in Bitcoin. BTC pulled back below $80K and still needs to clear the key $82.8K–$83K resistance zone to strengthen the case for a new bull market, according to CoinSwitch Markets Desk. Nicolai Sondergaard from Nansen said the importance of the address would come from its effect on interest rates, the dollar and the Fed's response to new economic data, rather than a simple hawkish-versus-dovish label. For American investors, the Fed's next decision could affect Treasury yields, the dollar and prices across risk assets, including US-listed spot Bitcoin exchange-traded funds.
