Bitcoin fell below $77,000 after Federal Reserve Chair Kevin Warsh used his Jackson Hole speech to reinforce the possibility of further interest-rate increases if inflation remains stubbornly above target.
The move reversed part of Bitcoin’s recent rally toward $80,000 and came as traders rapidly repriced the September Fed meeting. Rate futures pushed the probability of a 25-basis-point hike to 55.7%, up from 35.4% before Warsh spoke, according to Reuters.
Warsh did not commit to a hike, but he said the Fed would still have “work to do” unless inflation moves convincingly toward its 2% target. July PCE inflation stood at 3.7%, leaving policymakers with limited room to declare victory over price pressures.
Higher Yields Pressure Bitcoin
The clearest market reaction appeared in short-term bonds.
The 2-year Treasury yield rose to about 4.31%, while the U.S. dollar strengthened after the speech. Higher yields increase the return available on relatively low-risk government debt, which can reduce the appeal of non-yielding and higher-volatility assets such as Bitcoin.
That is almost the opposite environment that supported BTC earlier in August. Bitcoin had rallied toward $79,500 after Treasury bond-buyback measures helped ease long-term yields, while institutional demand strengthened. Coinpaper’s earlier BTC rally coverage showed weekly spot ETF inflows reaching roughly $1.9 billion during that rebound.
ETF Demand Meets a Tougher Macro Backdrop
Institutional buying has not disappeared. U.S. spot Bitcoin ETFs took in another $242.3 million on Aug. 27, extending their inflow streak to nine sessions and bringing the run to approximately $3.04 billion, according to fresh ETF flows.
That demand could provide support, but the macro environment has become less favorable.
Before the speech, traders were already focused on $77,000 as an important short-term level. Market analysis had warned that losing it could weaken momentum after BTC repeatedly failed to hold the $81,000–$83,000 resistance zone.
For investors less familiar with why monetary policy has such a large effect on crypto, this evergreen Bitcoin guide explains the asset’s fixed supply and market structure.
The immediate question is whether Bitcoin can quickly reclaim $77,000. Failure to do so would leave the recent breakout vulnerable, while a recovery would suggest ETF demand is still strong enough to absorb a more hawkish Fed backdrop.