Fed Chair Kevin Warsh used his first Jackson Hole keynote on August 28, 2026 - marking his first 100 days in office - to deliver a hawkish signal on interest rates. He stressed that 12-month Personal Consumption Expenditures (PCE) inflation remains stuck at 3.7%, while 6-month PCE inflation came in even higher at 4.1%.
Both figures sit well above the central bank’s 2% target. A breakdown of the PCE basket revealed widespread price pressures, with 54% of the 199 goods and services categories registering price increases exceeding 3% over the past 12 months. Confronted with persistent inflation data, Warsh stated that the Fed must have full confidence core inflation is moving toward the target at an adequate pace, or policymakers will have to resume tightening measures to rein in prices.
Weighing in on the speech, Nansen analyst Jake Kennis highlighted Warsh’s comment that the Fed struggles to describe broader financial conditions as restrictive - a phrasing that keeps the door open for a September rate hike.
Interest Rate Bets Shift Rapidly
Market participants quickly revised their expectations; according to CME Group’s FedWatch tool, the probability of a September rate hike surged to 55% from 35.4% the previous day. A similar reaction unfolded on prediction platform Polymarket, where the odds of at least one rate hike in 2026 reached 68% - up from under 50% last week.
In response to this shift in expectations, Bitcoin’s price - which touched $81,455 overnight - reversed course and fell to a low of $76,877 during Friday trading. The leading cryptocurrency plunged from intraday levels above $80,000 to around $79,200 shortly after Warsh concluded his speech, recording a daily decline of nearly 2%.
Cooling buyer momentum is evident in Bitcoin’s Relative Strength Index (RSI), which dropped to 69.7 from an overbought reading above 80. Nonetheless, the Average Directional Index (ADX) at 39.5 indicates that the underlying price trend remains on solid ground.
Two Opposing Forces
Bitcoin’s price correction coincided with a massive derivatives settlement on the Deribit exchange. Roughly $6.4 billion in Bitcoin options expired at 08:00 UTC on Friday, spanning 81,700 contracts divided between 44,639 call options and 37,061 put options.
Despite macroeconomic pressure, Bitcoin prices continue to find support from institutional demand in the United States. US spot Bitcoin ETF products registered $2.8 billion in inflows over eight consecutive days, marking the longest accumulation streak since April. While Warsh offered no specific interest rate guidance, he maintained that PCE must approach 2% before the Fed can pause its tightening stance. Bitcoin’s next move now hinges on upcoming August CPI and PPI data releases scheduled ahead of the Federal Reserve’s September meeting.
Source: crypto.news.
Read also: US Debt Hits $40 Trillion or 123% of GDP - Capital Shifts to Bitcoin as Hedge
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
