Hawkish Fed Speech Sinks Bitcoin Price Below $77K
Bitcoin (BTC) price plummeted to $78,442 on Bitstamp after Federal Reserve Chair Kevin Warsh delivered a hawkish speech at the Jackson Hole Symposium. Warsh's tone was cautious on inflation, saying recent improvements in CPI and PCE data do not mean underlying trends have 'meaningfully improved'. This sent a strong signal that the Fed remains focused on its 2% inflation target.
The speech sparked a significant increase in odds of a September rate hike, with CME's FedWatch tool showing a jump to over 59%, up from around 35% the day prior. Traders also took note of Warsh's announcement that forward guidance will no longer be used as a regular Fed practice.
The U.S. dollar index rose 0.5% on the day, while Bitcoin declined 3.4% to around $77,494. Analyst Ted Pillows noted that momentum was weakening and suggested a pullback towards $74,000-$75,000 was possible before any further upside.