Narrative of the Week: The Fed Turns Hawkish AgainThe biggest market narrative this week was arguably Fed Chair Kevin Warsh's speech at Jackson Hole.
At the start of the week, the market was mostly focused on BTC's continued rally and its attempts to break above $80K. But attention gradually shifted toward inflation and the Fed's future policy.
First, July's PCE came in slightly above expectations. Then Warsh's speech made it clear that another rate hike remains a real possibility if inflation fails to move convincingly toward the Fed's 2% target.
The most important development was the shift in market expectations: following Warsh's speech, the probability of a September rate hike increased significantly.
For crypto, this is far from an ideal backdrop. Tighter monetary policy means less liquidity and tougher conditions for risk assets.
At the same time, BTC has yet to show any real capitulation from buyers and continues to trade near key levels.
The big question now is whether Bitcoin can keep pushing higher despite the return of hawkish Fed expectations.
