Bitcoin Slips to $78.4K After Fed Chief Warns on Inflation

Bitcoin took a small tumble after the head of America's central bank gave a cautious speech about inflation, leaving traders unsure about what comes next.

Bitcoin (BTC) — the world's largest cryptocurrency (a form of digital money) — dipped to $78,442 during Friday trading, down around 1%. It has been struggling to break firmly above the important $80,000 mark.

The drop came after Kevin Warsh, the new chair of the US Federal Reserve (the "Fed" — the central bank that controls US interest rates and manages the economy), spoke at a major yearly gathering of economists in Jackson Hole.

Why did Bitcoin react? Warsh played down recent good news on inflation (the rate at which prices for everyday goods rise). Even though two key measures — the CPI (Consumer Price Index) and PCE (Personal Consumption Expenditures) — showed prices cooling more than expected, Warsh said this doesn't prove inflation is truly falling.

Why this matters for Bitcoin:

• Lower inflation usually makes the Fed more likely to cut interest rates.
• Lower interest rates tend to push investors toward riskier assets like Bitcoin and stocks.
• Warsh's cautious tone suggested rate cuts may not come as soon as hoped.

He also promised to stop giving markets "forward guidance" — hints about future Fed decisions — saying the practice had "overstayed its welcome."

Stocks held up better than Bitcoin. Both the S&P 500 and the tech-heavy Nasdaq (two major US stock market indexes) rose about 0.5%, helped by Warsh's positive comments on businesses and the AI sector.

Despite the daily dip, Bitcoin is having a strong month. Key numbers:

• Up 26.35% so far in August
• Its best August performance since 2017

Analysts say Bitcoin faces a wall of selling pressure between now and $86,000, which could slow further gains. Experts also warn that for a healthy rise, buying should come from real investors rather than risky borrowed money (leverage).

The takeaway: Bitcoin remains near record-strong levels this month, but the Fed's cautious inflation stance is keeping traders on edge in the short term.

This is an AI-generated summary. Read the original article at: https://cointelegraph.com/markets/bitcoin-dips-fed-warsh-dismisses-recent-low-inflation-prints?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound