Warsh's Hawkish Jackson Hole Speech Lifts Yields, Sinks Risk as BTC Slides Below $80K

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In Today's Note

• US 2-year yields spiked 11bp to 4.34% (currently 4.36%) after Chair Warsh's hawkish Jackson Hole speech, Fed funds futures now price a 66% chance of a September hike from 40% a week ago, S&P 500 -0.3% and Nasdaq-100 -0.7% led by chip stocks, Brent past $91 on renewed US-Iran strikes in the Strait of Hormuz, BTC dropped below $80K to $77.9K while ETH held near $2,447.
• The LSE is partnering with Kraken-parent Payward to launch tokenised UK stocks on its new night-time venue and Hyperliquid Labs is reportedly linking with Payward's CFTC-regulated Bitnomial subsidiary to offer crypto perps to US traders, while Bitmine bought 53,501 ETH to lift its treasury to 5.9M ETH ($14.8B, 4.9% of supply) and Strategy purchased 4,603 BTC at $80,318 avg after a 10-week pause, and Cronos halted operations after a $75M Tectonic lending exploit.

Market Snapshot: Overnight Moves

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Macro & Markets

• Short-term US treasury yields rose sharply on Friday (and have continued to do so today) while risk assets sold off following Chair Kevin Warsh’s keynote Jackson Hole speech. 
• Two-year yields climbed 11 basis points to 4.34% and currently trade around 4.36%, while the yield on longer-dated securities moved by a smaller amount. 
• The US dollar strengthened while gold, risk-assets and BTC all fell, a sign that markets clearly interpreted the Chair’s speech as hawkish.

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• Warsh warned that the Fed’s predominant focus right now should be on prices” and it must be “confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job”. 
• Another hawkish comment was that “on balance, I would be hard pressed to describe broad financial conditions as restrictive”. 
• Both lines were interpreted by markets to mean Warsh at least opened the door for a September rate hike. 
• Federal funds rate futures now indicate a 66% chance of a hike, up from 40% a week earlier. 

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• The Chair also used the speech to emphasise some other points he’s advocated for since becoming Chair and address, at least partly, some concerns that were left following his July FOMC press conference. 
• He stated that “short-term interest rates are the predominant tool” that the Fed will use to achieve its dual mandate and that “Unconventional policies to spur economic activity may suit genuine crises but should otherwise be used sparingly, if at all” (balance sheet expansion). 
• As such, the central bank should “not indulge a regime in which market participants are looking primarily to the Fed for their next trade”. 
• In the July FOMC meeting he indicated that the Fed may prioritise other inflation metrics beyond the PCE index, however in his Jackson Hole speech he stated that the 2% target in the PCE was “firm and fixed.”

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• The speech saw US stocks end the day lower , the S&P 500 Index closed -0.3%, dragged down by tech stocks. 
• Every member of the semiconductor subindex dropped, with Nvidia Corp. contributing most to the group’s decline. 
• The tech-heavy Nasdaq 100 fell 0.7% while BTC dropped below $80,000 amidst the cooling in risk-on/ rate-sensitive asset momentum.
• The drop in BTC was modest however, relative to its recent rally past $80K from mid-$60K.

• With yields at the front-end of the curve shooting higher, Warsh’s keynote speech has flattened the yield curve, the opposite reaction from markets following his July press conference. Back then, the curve steepened the most since August 2025 as long-dated yields climbed higher over fears the Fed would not do enough to bring inflation down. 

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• Brent crude climbed past $91 a barrel after the US and Iran exchanged strikes for the first time since late July. 
• The US Central Command hit Iranian rocket launchers preparing to send mines into the Strait of Hormuz, while the Islamic Revolutionary Guard Corps responded by firing missiles towards US air bases in Jordan.
• A spokesperson for US Central Command, said on Sunday that American “forces are monitoring the area closely and remain prepared to protect the free flow of commerce through this essential waterway.”

• The new escalations come after the US recently moved away from military action toward an economic pressure campaign. 
• Treasury Secretary Scott Bessent began last week vowing an “economic onslaught” against Iran and its trading partners, though the operation has so far been shrugged off by Iran and its partners. 

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• On Friday, Scott Bessent revealed a letter on X that he wrote in response to Democratic Senator Elizabeth Warren on Aug 27, who was enquiring about the US’s yen intervention. 
• In the letter, Bessent wrote “Japan is a major holder of US Treasuries” and “Disorderly yen markets can trigger forced unwinds, which could destabilize global markets and ultimately raise borrowing costs for American families and businesses.”
• Bessent added the intervention involved “existing Exchange Stabilization Fund foreign-currency assets for yen”, with “No credit” being extended to Japan. As such the country “owes Treasury nothing. There is therefore no risk that Japan will fail to repay a debt that does not exist.”

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DeFi / Web3 / Altcoins / Crypto

• The London Stock Exchange (LSE) is partnering with Payward, the parent company of Kraken, to offer tokenized versions of major UK stocks on its new night-time trading venue, with a launch planned for 2027 subject to FCA approval.
• The tokens will be backed 1:1 by conventional shares and track their prices, but holders will have no legal ownership of the underlying company or dividend rights, with LSE exploring full rights-bearing tokens separately.
• Payward already operates xStocks, its tokenized-equities platform, and plans to make tokenized versions of the UK’s 100 largest stocks available in the coming weeks, while the LSE partnership is intended to broaden global and onchain access to UK equities.

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• Hyperliquid Labs, the developer behind Hyperliquid, is also reportedly working with Kraken parent Payward on a structure that would bring crypto perpetual futures to U.S. traders.
• Under the proposed arrangement, Bitnomial, Payward’s CFTC-regulated derivatives subsidiary, would offer eligible U.S. users selected perpetual contracts linked to markets on Hyperliquid, with Payward having presented the structure to the CFTC for approval.
• Regulatory approval remains pending, and former SEC counsel Ashley Ebersole said required changes involving custody and trade-routing rules could take at least 10 to 12 months.

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• Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, is partnering with tZERO, a regulated tokenized-securities infrastructure provider, to develop infrastructure for public tokenized securities, with tZERO serving as a design partner for ICE’s upcoming NYSE-affiliated platform.
• ICE will also invest in tZERO’s latest funding round and license its portfolio of 103 blockchain patents, while ICE and tZERO will explore using tZERO-issued tokenized assets as collateral at ICE clearing houses and other ICE affiliates.

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• Chainalysis, a blockchain analytics firm, has sued U.S. Immigration and Customs Enforcement (ICE), alleging the agency unfairly structured a $94.66M sole-source blockchain analytics contract around capabilities closely matching rival TRM Labs’ existing products and relationships.
• ICE is seeking blockchain analytics tools for Homeland Security Task Force investigations, including tracing and recovering illicit crypto assets, screening scam wallets, detecting ransomware activity and disrupting crypto-linked scams and sextortion networks.
• Chainalysis says ICE gave competitors only three days and one page to demonstrate their capabilities before awarding TRM the contract and is asking a federal court to block the award and require a full and open competition.

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• Bitmine Immersion Technologies, the world’s largest corporate holder of ether, acquired 53,501 ETH over the past week, increasing its treasury to 5.9M ETH worth about $14.8B, equivalent to 4.9% of Ethereum’s supply and roughly 98% of its 5% ownership goal, with 86% of its holdings currently staked.
• Bitmine Chairman Tom Lee said, “The top 3 performing assets since June 30th are ETH, BTC and SOL,” adding that ether outperformed the S&P 500 by 5,430 basis points in the third quarter through Aug. 28.

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• In parallel, Strategy, the world’s largest corporate bitcoin holder, purchased 4,603 BTC for $369.7M at an average price of $80,318, bringing its holdings to 845,050 BTC worth about $66.1B, equivalent to more than 4% of bitcoin’s 21M supply cap.
• The acquisition was funded through sales of 4.53M MSTR shares for about $602.8M, with Strategy also spending $151.8M to repurchase STRC preferred shares and increasing its cash balance to $1.61B.
• The purchase marked Strategy’s return to bitcoin buying after a roughly 10-week pause, with Executive Chairman Michael Saylor posting “We’re back” ahead of the disclosure.

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• Publicly traded Bitcoin treasury company Strive also purchased 1,800 BTC for roughly $143M at an average price of $79,431, increasing its holdings to 23,156 BTC and making it the fifth-largest public corporate Bitcoin holder.

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• Cronos, the Crypto.com-linked blockchain network, halted operations after an exploit hit Tectonic, its largest lending protocol, with onchain researcher Weilin Li estimating roughly $75M in assets were affected.
• Li said the attacker manipulated Tectonic’s illiquid TONIC token to roughly 100 times its price and used the inflated collateral to borrow other assets, but managed to bridge only about $6M to Ethereum before Cronos halted the network.
• Tectonic and Cronos have not confirmed the $75M estimate or the exploit’s root cause, while Crypto.com CEO Kris Marsalek said the exchange and app were not compromised and its security team was assisting the investigation.

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• Prediction market Kalshi has permanently banned former U.S. Rep. George Santos for trading a contract tied to whether he would attend the State of the Union, marking the platform’s first permanent user ban.
• Kalshi also ordered Santos to pay a fine of just over $71,000, after finding reasonable cause to believe his trading activity violated its rules.
• The action follows Santos’ $35,000 settlement with the CFTC in July over the same trades, after the regulator said he bet on his own State of the Union attendance and made misleading public statements, including saying he would attend before ultimately not attending, that moved contract prices in his favor and generated more than $17,500 in profit.

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• Kalshi has reportedly signed an exclusive partnership with the U.S. Tennis Association (USTA) to become the US Open’s prediction market partner, with the agreement taking effect immediately and financial terms undisclosed.
• Under the reported deal, the USTA will prevent rival prediction market platforms from advertising at the US Open and across its television coverage, including ESPN broadcasts.

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• Robinhood Chain, Robinhood’s blockchain network, recorded a record $989M in daily DEX trading volume on Friday, while total value locked reached an all-time high of $708M, nearly doubling month-over-month.
• Stablecoin supply increased 47% to roughly $770M, while August trading activity shifted toward utility and infrastructure tokens, with memecoins paired against tokenized stocks accounting for about a quarter of stock-linked trading volume.

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• Solana’s seven-day average fee generation reached a record of nearly 9,200 SOL, more than 80% higher than three months earlier, while non-vote transactions hit a record 191M on a seven-day basis.
• On Aug. 28, 2026, Solana validators approved SGP-0002, which doubles the annual disinflation rate from 15% to 30% and is projected to reduce SOL issuance by roughly 18.9M tokens over six years, lowering future staking rewards and inflation.

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This Week's Calendar

Charts of the Day

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Figure 1. Block Scholes BTC Risk-Appetite Index (white, left-hand axis) and BTC spot price (orange, right-hand axis).

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Figure 2. Block Scholes ETH Risk-Appetite Index (white, left-hand axis) and ETH spot price (purple, right-hand axis).

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Figure 3. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 4. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 5. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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Figure 6. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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