Key facts
- Bitcoin fell to $76,877 on Friday after Fed Chair Kevin Warsh's hawkish remarks.
- Warsh stated the Federal Reserve has 'work to do' to combat inflation.
- The probability of a September rate hike rose to about 56%.
- Over $481 million in crypto liquidations occurred, with a significant portion from long positions.
- Despite the sell-off, long-term sentiment remains bullish, with a strong majority of traders expecting Bitcoin to reach $84,000.
- U.S. spot Bitcoin ETFs have seen consistent inflows, totaling $2.8 billion over eight days.
Bitcoin experienced a significant drop on Friday, falling to a low of $76,877 after Federal Reserve Chair Kevin Warsh delivered hawkish remarks at the Jackson Hole symposium. Warsh indicated that the central bank still has substantial work to do to bring inflation down to its target, leading to a jump in the odds of a September rate hike to approximately 56% from 35% the previous day. The sell-off liquidated roughly $481 million across the crypto market in the 24 hours surrounding Warsh's speech, with over $360 million stemming from long positions that were caught off guard. Bitcoin closed the day down 3.39% at $77,557. Despite the short-term pullback, technical indicators suggest the move may be a digestion of gains rather than a reversal. The Relative Strength Index remains below overbought levels, and the Average Directional Index indicates a strong trend. The price remains within a bullish leg from its June low. Long-term sentiment appears largely unshaken, with a significant majority of traders on the Myriad platform pricing Bitcoin's next major move towards $84,000 rather than a drop to $55,000. This bullish outlook is supported by consistent inflows into U.S. spot Bitcoin ETFs, which have seen $2.8 billion over eight consecutive days. This demand is partly linked to the Treasury Department's increased long-dated bond buybacks, which could lower yields and weaken the dollar, reviving the 'debasement trade' narrative for Bitcoin. However, Warsh's decision to avoid providing explicit forward guidance means Bitcoin remains susceptible to volatility based on upcoming inflation data, such as the PCE price index, which is currently running at 3.7% annually. Resistance levels around $81,000 to $82,500 need to be reclaimed for bulls to push towards new highs, while a break below the $73,670 to $75,157 band could signal further downside.