Bitcoin faces macro test as Fed Chair Kevin Warsh highlights sticky inflation

Federal Reserve Chair Kevin Warsh said 54% of 199 PCE components rose faster than 3% over 12 months. The figure gives traders a broader inflation measure for assessing Bitcoin's rate risk. Bitcoin fell below $80,000 during Asian trading after reaching $81,280 overnight. Warsh said 49% of PCE components rose faster than 3% at a six-month annualized rate. The 12-month measure declined from nearly 77% after the pandemic to 54%. The pre-pandemic average was 32%. Warsh put six-month annualized headline inflation at 4.1%. The Bureau of Economic Analysis reported that headline PCE inflation rose 0.2% in July and 3.7% from a year earlier. Warsh said the Federal Reserve's target remains 2% PCE inflation. He described labor markets as consistent with full employment. He said broad financial conditions were difficult to characterize as restrictive. U.S.-traded spot Bitcoin ETFs attracted more than $1.1 billion over four completed sessions through Aug. 27. Farside Investors recorded net inflows of $337.6 million on Aug. 24. The funds recorded $314.3 million on Aug. 25. The funds recorded $232.2 million on Aug. 26. The funds recorded $242.3 million on Aug. 27. BlackRock's iShares Bitcoin Trust accounted for $971.7 million, or roughly 86% of the total. The Associated Press reported that the two-year Treasury yield rose to 4.29% from 4.22% before the speech. The 10-year yield rose to 4.69% from 4.67% late Aug. 27. The 30-year yield fell to 5.17% from 5.19%. Treasury said maximum liquidity-support buybacks in the 10-to-20-year and 20-to-30-year nominal sectors will rise from $2 billion to at least $4 billion per operation. The operations will run from Sept. 9 through Nov. 4. Treasury described the buybacks as debt-management operations rather than a Federal Reserve easing measure. The operations retire less-liquid Treasury debt while Treasury continues to fund itself through issuance.