The cryptocurrency market has come under pressure again after U.S. Federal Reserve Chairman Kevin Warsh confirmed a commitment to a tight monetary policy stance. The leading cryptocurrency, after reaching a local peak around $81,455, sharply reversed downward and slid to $76,877. As of the data recording moment, the asset is trading near the $77,700 mark, showing heightened volatility.
Market Reassessing Rates
The key trigger was Warsh's speech, who, despite weak summer inflation data (CPI and PCE), stated there was no significant progress in the underlying trend. The annual growth of the personal consumption expenditures price index stands at 3.7%, and on an annualized basis over the past six months — 4.1%, far from the 2% target. The regulator made it clear: if inflation does not begin to quickly approach the target, the central bank will continue tightening.
The market reacted instantly. The probability of a rate hike at the September meeting (September 15-16) jumped from 35.4% to 57%. Notably, Warsh abandoned the practice of providing forward guidance, calling it "outdated." In his logic, excessive forecasts create a vicious cycle where markets wait for hints from the Fed, and the Fed looks to the market.
Ether and Altcoins in the Red
The second-largest cryptocurrency by market capitalization, Ethereum, corrected by 2.1%, dropping to $2,400. Nearly the entire top-10 largest assets show negative dynamics. Over the past 24 hours, the volume of liquidations exceeded $384 million, of which $310 million came from long positions — a classic scenario for such sharp moves.
Institutional Demand as a Counterweight
Despite the correction, fundamental flows remain positive. U.S. spot bitcoin ETFs recorded inflows of $2.8 billion over eight consecutive trading sessions (data as of August 26), with $2.02 billion of that going to BlackRock's IBIT fund. Additional support came from the U.S. Treasury's decision to increase the volume of buyback operations for long-term Treasury bonds — starting September 9, the limit per operation will rise from $2 billion to $4 billion. This contributed to lower yields and a weaker dollar, which traditionally favors risk assets.
In August, bitcoin demonstrated impressive growth from roughly $62,000 to $80,000, but the market is now in a consolidation phase. QCP Capital analysts rightly note: the nature of the move is critical for a sustainable breakout above $83,300. A gradual rise in open interest with moderate funding rates looks much healthier than a synchronized inflation of a leverage bubble.
My comment: The market once again shows high sensitivity to Fed monetary policy. However, sustained institutional demand through ETFs and support from the U.S. Treasury create a solid foundation. In the short term, the key level will be the $75,000–76,000 zone — holding this range will determine the direction of movement for the coming weeks.