Warsh's Inflation Warning Sends Yields Skyrocketing, Testing BTC's Resilience

US Treasury yields surged after Federal Reserve Chair Kevin Warsh's speech at Jackson Hole emphasized that inflation remains the Fed's primary concern. The 2-year yield jumped to a one-month high, pushing expectations for another rate increase to 60%.

The breakout above 4.35% on the four-hour chart is seen as a key test for Bitcoin and other risk assets, which may face increased competition from low-risk dollar assets.

Bitcoin has thus far resisted a deeper breakdown, trading near $78,000 and holding above its 50-period EMA at approximately $77,095. However, momentum has cooled substantially since BTC's strong August advance.

The macro risk is that Treasury yields remain elevated or continue higher, potentially tightening financial conditions and reducing speculative assets' appeal.