Bitcoin fell 3.5% intraday to $77,555 on Aug. 28, retreating from an August surge that pushed the token above $81,000 for the first time since May. The decline follows Fed Chair Kevin Warsh's cautious Jackson Hole remarks and comes as derivatives positioning unwinds after a record short squeeze.
Bitcoin fell 3.5% to $77,555 on Aug. 28, retreating from an August rally that peaked above $81,000 as macro headwinds and derivatives unwinding reasserted pressure.
Fed Chair Kevin Warsh said at the Jackson Hole Symposium on Aug. 22 that recent CPI and PCE readings "do not tell me that underlying trends have meaningfully improved," tempering expectations for near-term rate cuts, according to the Federal Reserve's published remarks. The Fed funds target range stands at 3.50%-3.75%.
Bitcoin had gained 28% in August, its best monthly performance since 2017, after the U.S. Treasury announced plans to double purchases of longer-dated government bonds, pushing yields lower and reigniting demand for risk assets. The rally accelerated after a record $2.70 billion short liquidation event last week, the largest since 2021, according to CoinGlass data. Futures open interest fell to 587,584 BTC from 645,760 BTC on Aug. 14, while spot Bitcoin ETF flows totaled $2.686 billion in net inflows over the 20 sessions through Aug. 24, per Farside Investors data.
The pullback tests whether the August breakout can hold. Bitcoin's 200-day exponential moving average sits near $71,541, while the $75,339 level — the first target from last week's technical analysis — represents the next support zone. A daily close below $80,000 would favor a short-term correction, according to Finance Magnates technical analysis.
The decline comes as the broad dollar index held at 118.06 on Aug. 21, and the 10-year real Treasury yield stood at 2.40%, keeping opportunity costs elevated for non-yielding assets. Spot Bitcoin ETF products, including BlackRock's IBIT, reported a 0.03% 30-day median bid-ask spread on Aug. 24, suggesting institutional liquidity remains intact even as price momentum fades.
Derivatives data shows the unwind is concentrated in leveraged positions rather than spot selling. Annualized funding rates stayed below 10% even during the rally, and crypto-margined open interest accounted for just 11% of the total at 52,000 BTC, per Glassnode data reported Aug. 25. This suggests the pullback may be driven by short covering exhaustion rather than a fundamental shift in demand.
The next key test is whether Bitcoin can hold above $80,000 on a daily close. If it fails, the $75,339 level becomes the critical support. A break below the 200-day EMA near $71,541 would materially weaken the bullish setup and bring the former $66,780 range ceiling back into view, according to Finance Magnates.
This article is for informational purposes only and does not constitute investment advice.
