Warsh's Hawkish Signal Sinks Bitcoin Below $80,000

Federal Reserve Chair Kevin Warsh has sent a hawkish signal to markets by stating that inflation has not meaningfully slowed, and policymakers will have 'work to do' if price pressures don't move towards the 2% target. This has resulted in higher short-term Treasury yields, weighing on risk-sensitive assets such as Bitcoin.

Bitcoin fell below $80,000 after Warsh's remarks, while gold prices dropped nearly 3% as traders increased bets on a September rate hike and the dollar strengthened. Oil prices also declined, with Brent and WTI on track for weekly losses as traders monitored US monetary policy and the potential reopening of the Strait of Hormuz.

Warsh reiterated that the central bank remains committed to its 2% inflation target, describing it as a 'firm and fixed target.' He emphasized that he was committed to a policy discipline rather than a predetermined decision on rates, saying 'We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.'

Markets responded by increasing expectations for a September hike, with the implied probability rising above 50%, from around 36% before the speech.