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Key Takeaways
- Bitcoin’s ten-day rally has tracked a shift in Treasury bond-buying policy after the 30-year yield hit a 19-year high, even as July PCE inflation rose to 3.7%
- An analyst expects Warsh to focus on overhauling Fed operations rather than signaling a near-term rate move, predicting no hike before the midterms
- Hashdex’s CIO said Bitcoin’s price is tied more to global liquidity and long-term yields than the Fed’s rate decision, calling the link to rates “indirect”
Bitcoin traded at $79,047.24, up 0.77%, as investors positioned for Federal Reserve Chairman Kevin Warsh’s keynote address at the Jackson Hole symposium Friday. The cryptocurrency’s ten-day rally has tracked a shift in U.S. Treasury bond-buying policy, but traders say Warsh’s remarks could determine whether the advance continues.
Fed Chair Speaks as Inflation Runs Above Target
The Kansas City Fed’s annual Jackson Hole conference began Wednesday and concludes with Warsh’s speech Friday morning. He arrives at a difficult moment for the central bank, with inflation still running well above the Fed’s 2% target and long-term borrowing costs sitting near multi-year highs.
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, rose to 3.7% in July, a reading released earlier this week. Higher energy prices tied to the war in Iran contributed to the increase.
The Fed has held its benchmark interest rate steady in a range of 3.50% to 3.75% in recent months while adopting tougher rhetoric on inflation.
Analyst Sees No Rate Hike Before the Midterms
Mark Connors, chief investment officer at Risk Dimensions, said he expects Warsh to focus Friday on his broader plans to overhaul how the Fed operates, including changes to how the central bank measures inflation and communicates with markets, rather than signaling a specific near-term rate move.
Connors said Warsh will likely leave the door open to a future rate increase without committing to one. Traders raised their bets on a September hike following this week’s inflation reading, but Connors said that positioning gets ahead of where the Fed is likely to land. Connors said, referring to November’s congressional elections:
“There will be no hike before midterms.”
Bitcoin’s Rally Is Tied to Liquidity, Not the Rate Decision
Hashdex Chief Investment Officer Samir Kerbage said Bitcoin’s price is more closely tied to global liquidity conditions and long-term Treasury yields than to the outcome of the Fed’s next rate decision. Kerbage said. Kerbage said:
“The link is there, but it’s indirect.”
He added that Bitcoin’s price responds primarily to overall liquidity conditions and where long-term yields settle, the same dynamic that tends to move gold prices.
The U.S. Treasury said last week it would increase purchases of long-dated government debt after the 30-year Treasury yield reached a 19-year high. That announcement helped ease the bond selloff and coincided with Bitcoin’s move higher over the following days.
Kerbage described the rally as primarily a liquidity-driven event rather than one based on crypto-specific developments.
Stablecoin Policy Could Matter More for Broader Crypto Markets
This year’s Jackson Hole conference has centered its agenda on financial innovation, payments and policy, placing stablecoins, tokenized deposits and faster settlement systems directly in the discussion. That focus gives Warsh’s remarks potential relevance for crypto markets beyond the traditional interest-rate debate.
Kerbage said if Warsh treats those technologies as an integrated part of the financial system rather than as a risk requiring containment, the effect could extend well beyond Bitcoin.
Smart-contract networks and protocols built around tokenized payments and settlement have more direct exposure to a policy shift on that front than Bitcoin itself does.
Whether Friday’s speech reinforces the recent rally or reverses it will likely hinge on which of these two threads, interest rate policy or the administration’s stance on financial innovation, Warsh emphasizes most.
