July PCE inflation rose 3.7% year over year, above the 3.6% forecast.

Bitcoin fell to $78,600 as Treasury yields and the dollar rose.

Traders now await Kevin Warsh’s Jackson Hole speech on Friday.

Bitcoin (BTC) came under fresh macro pressure on August 26 after U.S. inflation stayed above the Federal Reserve’s target, while weaker consumer spending raised new concerns about economic momentum.

The figures left investors weighing whether the Fed will place greater emphasis on bringing down inflation or supporting a slowing economy, with Chair Kevin Warsh’s Jackson Hole speech now the next major policy event.

PCE Inflation Climbs to 3.7%, Above Forecasts

The U.S. Bureau of Economic Analysis (BEA) said on August 26 that personal income rose 0.4% in July, while after-tax income increased 0.5%.

Consumer spending rose only 0.2%, a notably slower pace than income growth.

The PCE price index increased 3.7% from a year earlier, above the 3.6% consensus estimate and nearly double the Federal Reserve’s 2% inflation target.

Bitcoin Falls Below $78,600 as Yields Rise

Equity markets showed little immediate reaction, but bond and currency markets moved more noticeably.

The 10-year Treasury yield climbed to roughly 4.65%, and the U.S. dollar strengthened after the release.

Gold fell about 0.86% to near $4,598 per ounce, reflecting weaker demand for non-yielding assets.

Bitcoin dropped below $78,600 in the hours after the data, while the broader crypto market remained roughly flat, up 0.2% over 24 hours, with total market capitalization near $2.746 trillion.

Markets Await Warsh’s Jackson Hole Address

Despite the hotter inflation reading, equities barely moved, suggesting investors are waiting for Fed Chair Kevin Warsh to speak at the Jackson Hole Symposium on Friday.

Warsh’s address is expected to offer a clearer view of how the Fed is assessing inflation, interest rates and economic growth. It will be his first appearance at the symposium as Fed chair.

If Warsh emphasizes inflation risks, markets may interpret that as a sign that rates could stay higher for longer, which would weigh on Bitcoin and other risk assets.

If he focuses on slowing growth and softer consumer demand, expectations for rate cuts could strengthen, supporting liquidity, risk appetite and potentially crypto.

The Fed’s long-standing target of 2% average annual inflation, measured through the PCE index, currently stands against a 3.7% reading.

The 30-year Treasury yield recently reached roughly 5.31%, prompting the Treasury to increase purchases of longer-dated bonds.

Warsh has also moved away from traditional Fed forward guidance, and Reuters has noted that this shift has made Fed policy harder for investors to interpret, adding to upward pressure on long-term yields.

Bitcoin is increasingly sensitive to changes in U.S. monetary-policy expectations, especially through Treasury yields and liquidity conditions. The latest data reinforced that focus by pairing sticky inflation with softer spending, leaving traders centered on whether Friday’s speech confirms a longer period of restrictive policy or a greater emphasis on slowing growth.