Bitcoin falls 4% to $77,712 as 'Rektember' meets rate-hike risk

Bitcoin fell 4% to $77,712 as of 09:55 UTC Monday, entering September — historically its weakest month — as revived Federal Reserve rate-hike expectations threatened the rally that had pushed the token above $80,000 last week.

The repricing followed Fed Chair Kevin Warsh's Jackson Hole remarks on Aug. 28, when he said he would be "hard pressed to describe broad financial conditions as restrictive" and argued inflation remains well above the central bank's 2% target. Traders lifted the probability of a September rate increase to about 60% from roughly 35% before the speech, according to CryptoSlate data.

The shift triggered $487.68 million in derivatives liquidations across 97,691 traders in 24 hours, with long positions accounting for more than $360 million of the losses. Bitcoin positions generated about $141 million of those liquidations, while the largest single position closed was an $11.66 million ETH-USDT trade on Binance, per CoinGlass.

The convergence of rate-hike risk and September's seasonal weakness — a stretch traders call "Rektember" — creates a setup where profit-taking and position unwinding could accelerate. Bitcoin's next support sits near $76,909, the low reached Friday, with resistance at $80,000, the level it traded near before Warsh's speech.

Warsh's insistence that the Fed's "predominant focus right now should be on prices" landed as a hawkish signal for markets that had been pricing in easier policy. The Fed's preferred personal consumption expenditures price index is running at 3.7% over the past year and at a 4.1% annualized pace over the past six months, both well above target. The two-year Treasury yield climbed to a one-month high after the remarks, and the dollar strengthened — a combination that tightens financial conditions for speculative assets like Bitcoin.

September's historical weakness

September has been the worst month for Bitcoin in most years since 2013, with average losses in the mid-single digits. The pattern reflects a broader seasonal tendency for risk assets to struggle after the summer as institutional flows slow and traders reduce exposure ahead of the fourth quarter.

The combination of seasonal selling pressure and macro headwinds is particularly acute this year because Bitcoin entered September with substantial leveraged exposure following its rally above $80,000. CoinGlass data showed more than $200 million in positions were closed within one hour of Warsh's speech alone. The broader crypto market cap stood at $2.71 trillion with 24-hour spot volume of $42.47 billion, according to CryptoRank.

A Fed without forward guidance

Warsh has moved away from the forward guidance his predecessors used heavily, arguing that telegraphing policy paths can distort markets. That approach could make upcoming inflation and employment releases more consequential for Bitcoin because traders will have fewer signals from the Fed about how policymakers intend to respond.

Apollo Global Management Chief Economist Torsten Slok has argued that such a regime could push more interest-rate moves outside Fed meeting days as investors continuously reprice economic data. Since the Fed began raising rates in 2022, much of the increase in longer-term Treasury yields has occurred outside FOMC meetings, Slok noted.

For Bitcoin, the immediate risk is that any firming in rate-hike expectations — whether from a hot CPI print or hawkish Fed commentary — triggers another round of deleveraging. The broader macro backdrop is also tightening globally: Tokyo CPI data released Friday showed inflation remaining above the Bank of Japan's 2% target, reinforcing expectations for further BoJ rate hikes and strengthening the yen.

This article is for informational purposes only and does not constitute investment advice.