Warsh Whispers "Inflation Risks Have Come Down" — Bitcoin Sprints Past $61K Like It's Heard It Before 🏃‍♂️

Federal Reserve Chair Kevin Warsh told the European Central Bank's annual forum in Sintra, Portugal on Wednesday that "Inflation risks have come down," reaffirming the central bank's commitment to returning inflation to its 2% target and sending risk assets sharply higher. Bitcoin ($BTC) reclaimed the $60,000 level within hours of the remarks, trading near $60,088, up roughly 2.8% over 24 hours, and extended the rally on Thursday to climb past $61,000. Ethereum ($ETH) rose about 3.3% to near $1,619 on Wednesday and added another 11.5% across the three sessions through Friday, reaching $1,901.74 according to CoinDesk data. The bounce lifted Bitcoin's market capitalization back above $1.2 trillion.

Speaking on a panel alongside European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Canada Governor Tiff Macklem, Warsh declined to offer guidance on the Fed's next interest-rate decision, saying policymakers would debate incoming data at their meeting in four weeks. He insisted the price-stability work was unfinished: "We're all in the price stability business … we've all looked around and we've seen that prices are too high." Lagarde said she regretted feeling "bound and compelled" by forward guidance and instead favors "framework guidance," in which the ECB explains how it reaches policy decisions without signaling a predetermined path for interest rates. Warsh expressed a similar view, saying the Fed's priority is to "get policy right" and that policymakers should discard communication tools if they make it harder to reach the best decisions.

On artificial intelligence, Warsh called the technology a potential driver of productivity but declined to call the AI spending boom inflationary, telling Nick Timiraos of The Wall Street Journal: "I'm not going to make a judgment now." Cleveland Federal Reserve President Beth Hammack had earlier tied AI-driven demand to the case for hikes: "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." Warsh said AI-driven capital expenditures are currently showing up on the demand side but could eventually expand the economy's supply side, with "huge implications for monetary policy."

The rally came against a turbulent macro backdrop. Bitcoin had slid to its 2026 low near $58,000 on Tuesday after U.S. consumer prices rose 4.2% in the year to May, the fastest since 2023, prompting the Fed to hold rates at 3.5% to 3.75% in June and signal a possible hike. A 7.9% drop in South Korea's Kospi index on Thursday, after Samsung Electronics and SK Hynix shed a combined $290 billion in market value according to Bloomberg, did little to dent the crypto bid. Gold also climbed alongside Bitcoin, rebounding to an intraday high of $4,115 after sliding to multi-month lows; silver added more than 6% in six hours.

Friday's U.S. jobs report amplified the move. The Bureau of Labor Statistics counted 57,000 new jobs for June, far below the 115,000 consensus, with April and May payrolls revised down by a combined 74,000 and labor force participation sliding from 61.8% to 61.5%. The June unemployment rate came in at 4.2% against 4.3% expected, average hourly earnings rose 0.35% or $0.13 to $37.64, the average workweek was unchanged at 34.2 hours, private-sector payrolls rose 49,000 and government payrolls rose 8,000. Traders cut the odds of further Fed hikes, and roughly $450 million in crypto short positions were liquidated within 24 hours, CoinGlass data shows, as bears rushed to cover. Bitcoin recovered to $61,600, up 6.5% from Tuesday's almost two-year low of $57,750.

Ether dominated the derivatives picture, accounting for $160.80 million of the $417 million in 24-hour liquidations as heavily bearish positioning was squeezed out, with $ETH open interest climbing to 14.31 million, the highest since June 10, alongside bullish funding rates near 10% annually and the strongest 24-hour cumulative volume delta among majors. Uniswap ($UNI) surged 11% on doubled trading volume after being confirmed as the primary AMM for Robinhood's layer-2 network; Solana ($SOL) extended its weekly gain to 17%; and AI tokens $FET, $RENDER and $TAO posted modest gains after weeks of selling pressure. Spot Bitcoin ETFs nonetheless posted $294 million in net outflows on Wednesday, extending June's record $4.5 billion exit, the products' worst month on record, even as prices climbed. Bitcoin trades near $61,465, up 1.18% over 24 hours, but remains 51% below its October 2025 record of $126,080 and down 44% over the past year, with the market still watching for a close above $67,000 and then $81,000 to reverse the downtrend.