Fed Chair Kevin Warsh triggers $488 million crypto liquidation cascade

Fed Chair Kevin Warsh's remarks revived rate-hike expectations and triggered a crypto liquidation cascade. Bitcoin fell below $77,000 after Warsh discussed the possibility of higher interest rates at Jackson Hole. CryptoSlate data showed Bitcoin reached $76,909 before recovering to $77,712. Bitcoin was down about 4% over the previous 24 hours. CoinGlass recorded $487.68 million in liquidations across the crypto market during the previous 24 hours. The liquidations affected 97,691 traders. More than $200 million in positions closed within one hour after the speech. Long positions accounted for more than $360 million of the losses. Bitcoin positions accounted for about $141 million. The largest individual liquidation involved an $11.66 million ETH-USDT position on Binance. Traders raised the probability of a September rate increase to about 60% from roughly 35% before Warsh spoke. Short-term Treasury yields rose after the remarks. The dollar also strengthened. The two-year Treasury yield reached a one-month high. Warsh said underlying inflation must move toward the Federal Reserve's 2% objective with sufficient speed. The personal consumption expenditures price index was running at 3.7% over the past year. The index was running at a 4.1% annualized pace over the past six months. Warsh said broad financial conditions were not restrictive. He described labor conditions as consistent with full employment. He also pointed to healthy consumer spending and strong business investment. Warsh said the Federal Reserve's predominant focus should be prices. Warsh did not commit to a September rate increase. He said incoming inflation and employment data would help determine the next policy move. He has moved away from forward guidance and rejected a mechanical reaction function for individual economic reports. Apollo Global Management Chief Economist Torsten Slok said this approach could push more interest-rate moves outside Federal Open Market Committee meetings. Reports indicated that gold and silver lost more than $700 billion in market value after the speech.