Bitcoin dropped sharply on Friday, sliding to $78,442 on Bitstamp after Federal Reserve Chairman Kevin Warsh delivered his first keynote address at the Jackson Hole Economic Symposium.
Fed stance and rate expectations
Kevin Warsh, who leads the US central bank, made cautious remarks regarding the current state of inflation. He dismissed recent improvements in the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE), stating that core inflation has not shown “meaningful improvement.” Warsh reiterated the Fed’s commitment to maintaining a 2% inflation target as its top priority.
Market participants viewed Warsh’s comments as hawkish, leading to a sharp shift in expectations for a September interest rate hike. The CME FedWatch tool moved the probability of a rate increase to above 59%, up from 35% the previous day.
“Core inflation has not meaningfully improved. Our 2% target is as important as ever, and we are prepared to act if warranted,” stated Federal Reserve Chair Kevin Warsh at Jackson Hole.
Warsh also announced the end of forward guidance as a regular policy tool, explaining that it had “overstayed its welcome” after being widely used following the 2008 global financial crisis.
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AAPLThe US dollar index strengthened by 0.5% during the session. Bitcoin, in turn, dropped 3.4% to $77,494 after hitting an intraday high of $81,330.
Market reactions and analyst commentary
Market analyst Ted Pillows, in a post on the X platform, noted that Bitcoin was consolidating near $80,000 but lacking bullish momentum. He suggested that a correction to the $74,000–$75,000 range could unfold before any potential rebound.
With momentum weakening, a short-term correction toward $74,000-$75,000 appears likely before any renewed upside for Bitcoin, according to market observer Ted Pillows.
Many traders responded to the Fed commentary by shifting funds into the US dollar, favoring its perceived safety amid rising policy uncertainty.
Kevin Warsh serves as the current Chair of the Federal Reserve, which is responsible for setting US monetary policy and influencing interest rate decisions.
Mini dictionary: Jackson Hole Economic Symposium – An annual economic conference hosted by the Federal Reserve Bank of Kansas City, bringing together central bankers, academics, and policymakers to discuss global economic issues.
ETF flows and recent market trends
On August 28, spot Bitcoin exchange-traded funds saw $202 million in net outflows, ending a nine-day streak of positive inflows, according to SoSoValue analytics shared by Wu Blockchain. In contrast, Ethereum ETF products attracted $102 million in net inflows, extending their consecutive positive flow to ten sessions.
| Date | Bitcoin ETF Net Flow | Ethereum ETF Net Flow | Bitcoin Positive Flow Streak | Ethereum Positive Flow Streak |
|---|---|---|---|---|
| August 28 | -$202 million | +$102 million | Ended at 9 days | 10 days |
Bitcoin’s decline comes after a strong rally, when its price gained 22.2% in the prior week—the largest seven-day jump in over three years.
The recent surge was fueled by positive shifts in US crypto regulation, larger institutional allocations, and increased demand for store-of-value assets like gold and digital currencies as US government debt exceeded $40 trillion and Treasury yields climbed.
QCP Capital, a digital asset trading firm, noted that the sustainability of Bitcoin above $83,000 would depend on healthy derivatives market conditions, calling for moderate funding rates and steady growth in open interest, rather than sharp spikes fueled by leverage.
Bitcoin remains up 26.35% for the month, achieving its strongest August performance since 2017, according to data from CoinGlass.
