Bitcoin News Today: Bitcoin's Fate Hangs on Fed's Inflation Tightrope

Bitcoin faces mounting headwinds as market participants weigh the likelihood of further losses in the wake of recent economic data and shifting Federal Reserve policy expectations. On August 19, Bitcoin traded near $113,000, having retreated from an all-time high of $124,128 recorded the prior week [4]. The pullback coincided with a broader selloff in risk assets, driven by concerns over inflation and geopolitical instability. The U.S. Producer Price Index (PPI) for July exceeded expectations, rising 0.9% month-on-month, amplifying fears that the Federal Reserve might delay rate cuts in September [6]. A stronger U.S. dollar and higher bond yields have also drawn capital away from riskier assets like cryptocurrencies [6].

The Federal Reserve's stance remains a critical factor in shaping Bitcoin's near-term trajectory. Inflation concerns, coupled with uncertainty around the impact of U.S. trade policies, have led to a more hawkish tone from central bank officials. Minutes from the Federal Open Market Committee’s July meeting highlighted that a majority of participants viewed inflation as the more pressing risk compared to employment [5]. The minutes have tempered market optimism and knocked the legs out of a modest crypto rally. Investors are now turning their attention to Federal Reserve Chair Jerome Powell’s address at the Jackson Hole Economic Symposium, where his comments on inflation and rate policy could determine the direction of markets in the coming months [4].

Analysts remain divided on Bitcoin’s future. While some predict further declines, others argue that the cryptocurrency’s long-term fundamentals remain intact. Harvard economics professor Kenneth Rogoff recently reflected on his 2018 prediction that Bitcoin would be worth $100 rather than $100,000 in a decade, noting that he had underestimated its role in the underground economy [2]. Rogoff also criticized regulators for being too lenient, a stance that aligns with broader concerns about the lack of oversight in the crypto space. Meanwhile, Bernstein analysts have taken a more bullish outlook, forecasting that Bitcoin could reach $200,000 within 12 months as part of a “long, exhausting bull run” [3]. This projection is based on ongoing regulatory reform and the Trump administration's push to position the U.S. as the global crypto capital.

Institutional adoption continues to play a pivotal role in Bitcoin’s price movements. Strong inflows into spot Bitcoin ETFs have driven demand, with corporate treasury allocations and investment strategies from major firms like MicroStrategy contributing to sustained buying pressure. However, recent comments from Treasury Secretary Scott Bessent that the U.S. government would not join the proposed Bitcoin reserve have introduced uncertainty for some investors [6]. Institutional participation remains a key driver of Bitcoin’s market capitalization, which, as of late August, stood at around $4 trillion [6].

The broader cryptocurrency market has also experienced volatility, with Ethereum and other major tokens following similar patterns. Ethereum, which approached its all-time high of $4,800 earlier in the week, retreated to $4,337 as of August 19 [6]. Solana and XRP also saw declines, with XRP dropping 6.7% and Solana losing 3.5%. The interconnected nature of the crypto market means that Bitcoin’s performance often acts as a bellwether for the entire sector [4].

As the market awaits further clarity from the Federal Reserve and economic data, Bitcoin’s price remains highly sensitive to macroeconomic developments. The upcoming release of U.S. jobless claims data and Powell’s speech in Jackson Hole will likely influence investor sentiment in the near term. While short-term volatility persists, the underlying drivers—regulatory changes, institutional adoption, and technological innovation—continue to support Bitcoin’s long-term growth trajectory.

Source:

[1] Bitcoin price rises ahead of Fed Jackson Hole speech (https://uk.finance.yahoo.com/news/bitcoin-price-crypto-federal-reserve-jackson-hole-085201361.html)

[2] Bitcoin Crash to $100? Harvard Professor Rogoff Revisits ... (https://www.coindesk.com/markets/2025/08/21/harvard-professor-who-predicted-bitcoin-crash-to-usd100-says-regulators-were-too-lax)

[3] Bitcoin could reach $200,000 within 6 months during 'long ... (https://finance.yahoo.com/news/bitcoin-could-reach-200000-within-6-months-during-long-exhausting-crypto-bull-market-173358527.html)

[4] Bitcoin Sinks as Concerns Over Inflation, Economic Data Mount (https://finance.yahoo.com/news/bitcoin-sinks-concerns-over-inflation-004918247.html)

[5] Hawkish FOMC Minutes Knocks Legs Out of Crypto Bounce (https://www.coindesk.com/markets/2025/08/20/hawkish-fomc-minutes-knocks-legs-out-of-crypto-bounce)

[6] Crypto losses deepen as inflation clouds Fed outlook (https://qz.com/crypto-bitcoin-losses-continue-inflation-clouding-fed-rate-cut)