Bitcoin and crypto market at risk of a crash after a Fed official warning

AhmadJunaidCrypto NewsAugust 21, 2025364 Views


Bitcoin and the crypto market could be at risk after a senior Federal Reserve official warned about the state of the economy and the dangers of cutting interest rates too soon.

Summary

  • Bitcoin and the crypto market are at risk as Fed official warns on inflation and interest rates.
  • Beth Hammack believes that the Fed should not cut interest rates now that inflation is still elevated.
  • Jerome Powell will talk on Friday at the Jackson Hole Symposium in Wyoming.

Bitcoin (BTC) dropped to $112,000, well below its all-time high of $124,200. The global crypto market capitalization slipped by 1.45% to $3.8 trillion, with altcoins such as Mantle, Virtuals Protocol, Official Trump, and Ethena among the top laggards.

Beth Hammack warning on interest rates 

A key driver of Thursday’s market downturn was a statement by Beth Hammack, a senior Fed official, who cautioned that interest rates should remain higher for longer given steady inflation. She said

“We have inflation that’s too high and has been trending upwards over the past year. With the information I have, if the meeting was tomorrow, I would not see a case for reducing interest rates.”

Hammack’s statement came at the Jackson Hole Symposium in Wyoming, where Jerome Powell, the Fed Chair, will deliver a closely-watched speech on Friday. In it, he is expected to react to the recent economic numbers on jobs and inflation numbers.

The jobs report showed that the unemployment rate rose to 4.2% in July, while the core consumer inflation rose to 3.1% during the month. Another report by Michigan University showed that inflation expectations were rising.

If Powell reinforces Hammack’s stance, he could signal that inflation remains too high and that rate cuts will need to wait. Historically, Bitcoin and other cryptocurrencies tend to perform better when the Fed adopts a dovish outlook.

Bitcoin price rising wedge points to a crash 

Bitcoin price
BTC price chart | Source: crypto.news

The other major risk for the crypto market is that Bitcoin has formed a highly bearish rising wedge chart pattern on the weekly chart.

This pattern, which is shown above in green, is made up of two ascending and converging trendlines. A bearish breakdown normally happens when the two lines are about to converge.

Bitcoin has also formed a shooting star candlestick pattern, which is made up of a small red body and a long upper shadow. Like the wedge, it is also one of the most popular bearish reversal patterns in technical analysis.

Therefore, Bitcoin could be on the verge of a prolonged bear market, which could push it below $90. Such a move would hurt the broader crypto market since altcoins normally follow BTC.

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