Bitcoin (BTC) Nears $78K as Fed Chair Kevin Warsh Signals Further Tightening

Warsh Skips the $40 Trillion Question

Federal Reserve Chair Kevin Warsh used his inaugural Jackson Hole address on August 28 to sidestep the one subject weighing heaviest on bond markets: America's national debt, which crossed $40 trillion for the first time on August 18, ten days before he spoke. The US Treasury added roughly $1 trillion in new borrowing in just a few months to reach the milestone. Our read of the prepared text shows the word “debt” appears exactly once — and not about fiscal policy: Warsh thanked his hosts by quipping that “everyone here is in debt.” The omission stands out against the arithmetic. The Congressional Budget Office projects a federal deficit of about $2.1 trillion for the fiscal year ending September 30, and Washington has run shortfalls above 4% of GDP every year since 2019 — a level historically confined to crises and deep recessions. Heavy issuance and rising debt-service costs have produced weeks of Treasury-market volatility that analysts now rank among the principal challenges facing the US economy, yet Warsh declined to address the government's balance sheet directly. His clearest anchor was instead artificial intelligence: he said the pace of technological progress looks like “a kind of super Moore's Law,” arguing AI materially lifts US growth potential. That echoes the line long pushed by Treasury Secretary Scott Bessent and President Donald Trump, who dismiss debt worries and bet that growth can close the fiscal gap. Equity investors have traded the same thesis all year — rotating into AI-linked names from memory-chip maker Micron (MU) to optical components supplier Lumentum (LITE), and even speculative satellite plays such as AST SpaceMobile (ASTS). Warsh, for his part, offered no growth target and never explicitly tied the AI boom to deficit reduction.

PCE at 3.7% Keeps Hikes on the Table

The other half of the speech was unmistakably hawkish. Speaking on the 100th day of his tenure, Warsh said the indicators on the price-stability side of the Fed's mandate look “more concerning.” The PCE price index, the central bank's preferred inflation gauge, rose 3.7% year over year in July, and its six-month annualized pace runs 4.1%; headline and core measures of both PCE and CPI sit above target. Warsh declared the 2% goal “firm and fixed,” set his test — underlying inflation must head toward it “clearly and at a sufficient speed” — and warned that failing that, “we have work to do.” He dismissed summer's better-than-expected prints as no proof of a genuine trend improvement, took full responsibility on behalf of the central bank for 65 straight months of elevated inflation, and judged overall financial conditions “difficult to describe as restrictive.” Outside inflation, his economic outlook stayed comparatively upbeat: he cited AI-driven productivity gains and solid consumer and business spending, and attributed slower hiring to stagnant labor supply rather than weak demand. On communication, he declared forward guidance “has lived out its useful life” — joking that his outline could be called an outline or a topo map, “just don't call it forward guidance” — and rejected publishing a formal reaction function, which he said “works better in the laboratory than in the field.” The Fed, he added, needs unfiltered market signals — Treasury prices and volumes, asset-price levels and credit costs — to set policy, while he stayed silent on the Treasury Department's expanded buyback program. Markets heard a tightening signal: CME FedWatch put the odds of a September rate hike at 55.7%, up from 35.4% a day earlier, while the 2-year Treasury yield climbed 6 basis points to 4.298%. Capital Economics called the message markedly more explicit than July's press conference, leaving room for a hike earlier than its December base case. Readers tracking the market in real time can follow live spot and futures prices on MEXC.

Greed at 73 as Bitcoin Nears $78K

COINOTAG's aggregate market data shows risk appetite holding through the repricing: our Fear & Greed Index reads 73 (Greed), Bitcoin (BTC) accounts for 68.9% of the coins we track, and our tracked market cap stands near $2.26 trillion. Bitcoin itself changes hands around $77,600 — so far absorbing the hawkish shift without distress.