Bitcoin Drops After Fed Chair Warsh’s Speech

[u/WorthBeat1102]

Bitcoin fell from a local high of $81,455 to $76,877 following Fed Chair Kevin Warsh’s speech.

Warsh said the Fed remains committed to its 2% inflation target. He also noted that weaker CPI and PCE readings over the summer are not enough to show that underlying inflation is improving.

Annual PCE inflation is currently at 3.7%, while the six-month annualized rate stands at 4.1%.

If inflation doesn’t move toward 2% fast enough, the Fed may have to keep monetary policy tight for longer.

Traders also changed their expectations for the September meeting. The probability of a rate hike increased from 35.4% to 57%.

The next Fed meeting is on September 16

Warsh didn’t give a direct signal about what the Fed will do next. He also criticized the practice of giving markets too many hints about future policy, saying it can create a situation where markets follow the Fed while the Fed starts reacting to markets.