Bitcoin dropped to a low of $76,877 on Friday, pulling back from the $81,455 level touched the previous night. The price decline was sparked by Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium, which dampened expectations for near-term monetary easing.
The central bank’s hawkish stance quickly hit the crypto derivatives market. A report from the @WatcherGuru account on X noted that $200 million in long positions were liquidated in just 60 minutes. Traders who had bet on a breakout above $81,455 resistance - a key level that has capped several rallies throughout the year - are now repositioning for tighter liquidity conditions.
3.7% Inflation and the Absence of New Guidance
Marking his first 100 days in office, Warsh declined to provide new policy guidance. He emphasized that the Fed still needs clear evidence of inflation heading toward its target before declaring mission accomplished. The personal consumption expenditures (PCE) inflation metric is currently running at 3.7% annually, nearly double the Fed’s 2% target, and Warsh offered no timeline for when it might decline.
The speech immediately shifted money market expectations for next month’s interest rates. CME Group FedWatch data showed the probability of a September rate hike jumped to 55.7%, up from 35.4% previously. According to Warsh, the business climate continues to expand, with capital expenditures rising roughly 9% over the past four quarters and more than half allocated to artificial intelligence-related projects.
Policy Tug-of-War and Fresh Liquidity
Amid the sell-off that erased $200 million in buyers’ positions, crypto technical and fundamental metrics showed underlying strength. Bitcoin’s Relative Strength Index (RSI) cooled to 69.7 from overbought levels above 80 recorded during Tuesday’s rejection. Meanwhile, the Average Directional Index (ADX) at 39.5 indicated that the broader trend remains intact.
Institutional inflows also showed no signs of stopping. Through Wednesday, spot Bitcoin ETF products in the United States drew $2.8 billion across eight consecutive trading days. Liquidity received another boost from the US Treasury, which announced plans to double long-term bond buybacks starting September 9, reinforcing the hedge narrative against fiat currency debasement.
The sharp contrast between the central bank’s firm tone and massive institutional capital flows sits at the heart of this weekend’s market uncertainty. Still, prediction markets remain predominantly optimistic; the odds of Bitcoin breaking above $84,000 jumped 31.7 points to 77%, far outpacing the 23% probability assigned to a drop to $55,000. The market is now torn between bracing for the Fed’s next interest rate decision and betting on sustained ETF inflows.
Reported via Decrypt.
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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.
