Bitcoin stayed trapped around $80,000 ahead of the August monthly close after Federal Reserve Chair Kevin Warsh used his Jackson Hole keynote to warn against reading too much into softer recent inflation data. After the Friday Wall Street open, BTC turned volatile, dropped during the speech, and briefly touched $78,442 on Bitstamp before moving back toward $79,500.
Warsh says inflation has not “meaningfully improved”
TradingView data showed BTC/USD dipping to $78,442 in choppy trading, down around 1% at the time of writing. Bitcoin had failed to make a decisive break above $80,000 as traders weighed Warsh’s comments on inflation and the policy path ahead.
In his first keynote speech at the annual Jackson Hole Symposium, Warsh kept a cautious line on inflation and reaffirmed the Federal Reserve’s 2% target. He also repeated an earlier commitment to reduce the amount of policy signaling the Fed gives markets, rejecting a return to forward guidance.
“Forward guidance as a regular practice was adopted by my colleagues and me during the Global Financial Crisis. It was essential at the time, and we introduced it with much fanfare. But, as with other legacies of crises past, I believe that the practice has overstayed its welcome,” he said.
Warsh also dismissed recent lower-than-expected readings in the Consumer Price Index, or CPI, and the Personal Consumption Expenditures index, or PCE, as proof that a downward inflation trend is now underway.
“Each of these broad inflation measures have fallen significantly from their highs of a few years ago, but progress through the past couple of years has been more modest, and while this summer’s PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved,” he said.
US stocks avoided losses after the speech. The report noted that Warsh also offered a favorable view of business performance and growth in the AI sector. At the time of writing, both the S&P 500 and the tech-heavy Nasdaq Composite were up around 0.5%.
Derivatives seen as critical for a stronger BTC breakout
BTC price action kept oscillating around the $80,000 level in a narrow intraday range as the market approached the August monthly close.
Cointelegraph said earlier analysis around the monthly close called for BTC/USD to break above a downward-sloping trend line and hold the 50-week exponential moving average near $77,250 in order to keep the uptrend intact.
Onchain data also showed a thick band of resistance between the current spot price and $86,000, which was slowing upside momentum.
In its latest market note, trading firm QCP Capital said that even if Bitcoin breaks higher, derivatives markets would still need to support the move. Specifically, funding rates and open interest growth would need to remain under control.
“If price continues higher while funding remains contained and open interest rebuilds gradually, that would indicate a different market structure from one where leverage accelerates rapidly alongside price,” QCP Capital wrote.
The report also said that sustaining price action above $83,000 depends on Bitcoin derivatives traders.
According to CoinGlass data, BTC/USD was up 26.35% month-to-date at the time of writing, making this Bitcoin’s best August performance since 2017.
The article also referenced a related Cointelegraph item in which CryptoQuant CEO said the Bitcoin bear market was “over” as a price metric echoed the 2023 recovery.