Federal Reserve Chairman Kevin Warsh’s speech at Jackson Hall reinforced the market’s expectation of further interest-rate hikes, with the United States dollar and short-end US debt yield rising, and bitcoin falling below $77,000, in part rebuffing the previous surge in convergence to $80,000.
The interest rate increase is expected to increase in September.
Reuters data show that interest rate futures rose to 55.7 per cent, up from 35.4 per cent prior to the September interest rate increase of 25 basis points for the Federal Reserve following the Warsh speech. He did not make an explicit commitment to increase interest rates, but said that if inflation did not return to the target of 2 per cent, the Fed would still have “work to do”.
In the United States in July, PCE inflation stood at 3.7 per cent, a level that meant that it was still difficult to declare at the decision-making level that inflationary pressures had been contained. As a result, the market recalibrated its judgement on the path to follow-up policy and the risk asset constraint.
Short-end rate of return versus dollar
Following the speech,2 the annual United States Treasury debt return rose to about 4.31 per cent and the United States dollar grew synchronously. Higher risk-free rates of return tend to reduce the attractiveness of non-interest-creating, volatile assets such as bitcoin.
This contrasted with the environment earlier in August. At that time, the United States Treasury debt buy-back measures eased the pressure on long-term rates of return, and the overloading of institutional purchases increased, with bitcoin once rising to around $795 million. Coinpaper had previously mentioned that during that round, the spot bitcoin ETF had a net inflow of about $1.9 billion a week.
ETF is still in.
The funds were not completely withdrawn. The data show that United States spot bitcoin ETF net inflows of $242.3 million a day on 27 August and net inflows of about $3.04 billion a day for the ninth consecutive transaction.
However, the ETF buyout is currently facing a much tighter macro background. The market had previously identified $77,000 as a short-term critical position. If the price is not recovered, the recent breakthrough may further weaken; if this level can be restored, the ETF demand will still have the capacity to exert the expected pressure on the ETF policy.