Federal Reserve Chair Kevin Warsh delivered quite a hawkish speech at the Jackson Hole meeting on Friday, August 28, 2026. Warsh put substantial emphasis on inflation risks, which continues to remain above the Federal Reserve’s 2% target. His statements have led to increased expectations of an interest rate cut later this year. The US dollar is also gaining momentum, which gold was at its lowest during a Jackson Hole meeting. An interest rate hike and a stronger dollar could lead to Bitcoin (BTC) facing another price crash.
Will Higher Interest Rates And A Stronger Dollar Crash Bitcoin’s (BTC) Price?
Bitcoin’s (BTC) recent rally to the $80,000 price level was fueled by two major events. Firstly, President Trump held a cryptocurrency event in the White House which may have elevated investor sentiment. During the event, Trump stated that the US plans to purchase a large amount of Bitcoin (BTC) and other cryptocurrencies. The second event was the US Treasury’s decision to increase its bond buybacks. The buybacks led to increased liquidity which may have trickled into the cryptocurrency market.
The US Treasury will eventually need to refill its pockets. When that happens, liquidity could revert from Bitcoin (BTC) and larger cryptocurrency market. Such a move could lead to a price correction for crypto assets. Pair that with a potential rate hike, we could see Bitcoin (BTC) fall below the $70,000 mark once again. CME FedWatch data shows that there is a near 60% chance that interest rates will be raised by 25 basis points in September 2026.
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A stronger dollar also poses a threat to Bitcoin’s (BTC) gains. A strong US dollar means less hedges. People often flock to Bitcoin (BTC), gold, and other assets to hedge against the dollar. However, since the dollar is strong, people may not do so.