Warsh Whispers "Chill," Bitcoin Pops $61K While Chip Stocks Catch a Cold 🤒

Bitcoin ($BTC) pushed above $61,000 on Thursday, rising about 4.1% over 24 hours to reach its strongest level in more than a week, after Federal Reserve Chair Kevin Warsh told the European Central Bank's forum in Sintra, Portugal that "inflation risks have come down." The cryptocurrency traded as low as $58,200 earlier in the week before reversing sharply on the remarks, with Ethereum ($ETH) up roughly 3.3% near $1,619. Bitcoin's market capitalization climbed back above $1.2 trillion on the move. The advance stood in contrast to a steep sell-off in technology equities: South Korea's Kospi index fell 7.9% after Samsung Electronics and SK Hynix shed a combined $290 billion in market value, according to Bloomberg, the second time this month the index has dropped on renewed concerns about artificial-intelligence chip demand. Meta separately disclosed plans to sell spare computing capacity to outside customers, reviving debate over whether AI infrastructure investment has outpaced real demand.

Warsh, whose first international appearance as Fed chair came less than a month after a hawkish June rate decision, declined to provide guidance on the next interest-rate decision, saying policymakers would debate incoming data at their meeting in roughly four weeks. He reaffirmed the central bank's commitment to returning inflation to its 2% target. "If there were people in households or the business sector, in the financial markets, who thought that this central bank was going to be comfortable with an inflation objective above 2%, well, I guess they'd be disappointed," Warsh said. "We're going to deliver price stability in the U.S." He added: "We're all in the price stability business … we've all looked around and we've seen that prices are too high." U.S. consumer prices rose 4.2% in the year to May, the fastest pace since 2023, with the Fed holding its policy rate at 3.5% to 3.75% in June.

On AI, Warsh described the current surge in capital expenditures as a demand-side phenomenon he expects to broaden into the supply side over time, arguing that unlike prior cycles dominated by share buybacks, today's investment is aimed at productive capacity. He stopped short of declaring the boom inflationary. "I'm not going to make a judgment now," he said, according to a post by Wall Street Journal chief economics correspondent Nick Timiraos. Cleveland Federal Reserve President Beth Hammack recently framed the issue differently, saying of hyperscaler buyers: "What they say is that the demand is insatiable, that these companies, these hyperscalers, will pay almost any price for those inputs, and they need things built yesterday."

The Sintra panel also included European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Canada Governor Tiff Macklem. The four officials broadly agreed that central banks should step back from explicit forward guidance. Lagarde said she regretted feeling "bound and compelled" by forward guidance and prefers what she calls "framework guidance," under which the ECB explains its reaction function without committing to a specific rate path. Warsh echoed that view, saying the Fed's priority is to "get policy right" and that communication tools should be discarded if they impede optimal decisions. His softer tone also spilled into precious metals, with gold rebounding to an intraday high of $4,115 and silver gaining about 6%, adding roughly $1.05 trillion and $200 billion in market value, respectively, in a six-hour window.

Bitcoin remains down about 16% over the past month after hot May inflation data triggered $1.26 billion in leveraged long liquidations that sent the asset to a 2026 low near $58,000 last week. FxPro chief market analyst Alex Kuptsikevich said earlier this week that bitcoin was pinned below $60,000 in "a rather dangerous consolidation for the bulls," identifying $40,000 as the next meaningful support if that floor failed. Friday's U.S. jobs report now stands as the next major catalyst, with a strong payrolls print likely to reinforce restrictive policy expectations and a soft print likely to revive bets on rate cuts heading into July.