Fed's Warsh Signals Easing Inflation, Ignites Risk-On Rally for Bitcoin and Gold
Bitcoin surged back above $60,000 as Fed Chair Kevin Warsh signaled easing inflation risks, sparking a risk-on appetite. Gold also climbed, with traders interpreting Warsh's tone as less hawkish than expected. This shift comes after recent inflation fears and a sharp Bitcoin sell-off.
Bitcoin reclaimed the $60,000 level on Wednesday after Fed Chair Kevin Warsh suggested inflation risks are subsiding and adopted an open-minded stance on AI's economic impact. This narrative shift revived appetite for risk assets, pushing BTC and gold higher. Warsh, speaking at the ECB Forum, indicated that price pressures have eased since he took the helm, a sentiment traders found less hawkish than anticipated, despite his insistence that work on price stability remains unfinished. While Warsh remained non-committal on AI's inflationary potential, his comments contrasted with some Fed officials who linked AI demand to potential price hikes. The market reacted swiftly, with Bitcoin jumping 2.8% and Ethereum gaining 3.3%, reversing recent losses. Gold also rebounded sharply, adding to the broader risk-on sentiment, though Treasury yields ticked up, suggesting some market participants still anticipate higher-for-longer rates.