Warsh Warns: Inflation Remains Above Target, Bitcoin Corrects
Newly appointed Federal Reserve Chair Kevin Warsh's comments at the Jackson Hole symposium on August 28 sparked a correction in Bitcoin's price. Warsh emphasized that inflation remains above the central bank's target of 2%, with the Personal Consumption Expenditures gauge standing at 3.7% year-over-year and an annualized reading of 4.1% over the previous six months.
In response, Treasury yields climbed, and the probability of a September rate hike jumped to between 50% and 60%. This shift in expectations caught leveraged crypto traders off guard, leading to nearly half a billion dollars in liquidations, with $488 million coming from long positions.
Bitcoin initially dropped below $80,000 intraday before recovering to the $79,000 to $79,500 range. Warsh has previously acknowledged Bitcoin as both a market signal and an alternative asset, but noted its volatility limits its practical use as a currency.