Waller's Rate Hike Warning Sends Bitcoin Soaring Above $81,000

A surprise statement from Federal Reserve Governor Christopher Waller has sent Bitcoin prices soaring above $81,000. In an interview, Waller suggested that he may support keeping interest rates steady if inflation data continues to improve, reducing the chances of a September rate hike.

This shift in sentiment led to a significant change in market expectations, with rate traders revaluing odds of a hike at the Fed's September 15-16 meeting from 63.2% to 50.4%. The yield on the 10-year Treasury, which had been rising, dropped to 4.73%, and the cost of borrowing fell dramatically.

The price surge also led to a massive liquidation of short positions in crypto derivatives, with over $415 million worth of short bets getting liquidated. This move has benefited not only Bitcoin but also other cryptocurrencies like Ether and XRP, which saw significant gains. However, some analysts view the current move as a 'bull trap' and caution that the relief rally could turn into a distribution process.