Bitcoin (BTC-USD) edged higher in early Thursday trading, nudging back toward the $85,000 (£64,192) mark after a turbulent 24 hours. The modest rebound comes after a sharp sell-off after Federal Reserve chair Jerome Powell’s warning on Wednesday that US president Donald Trump’s tariff hikes could stoke US inflation and put pressure on economic growth.

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Powell’s comments sparked a swift pullback in cryptocurrency markets, with major altcoins posting outsized losses. Bitcoin, which had briefly approached $86,000, dropped as low as $83,700 before making a recovery to around $84,800 early on Thursday.

Meanwhile, US Treasury yields dipped in the wake of Powell’s remarks before posting modest gains on Thursday morning, while gold surged to a new all-time high above $3,322, reaffirming its status as the market’s preferred safe-haven asset.

In his speech at the Economic Club of Chicago, Powell warned that inflationary pressures were mounting just as growth projections began to soften, potentially leading to stagflation — a mix of slowing output and rising prices.

Solana (SOL-USD) led Thursday’s recovery among major altcoins, rising 8%.

Although some investors raised concerns about Treasury yields, Powell’s remarks helped to ease immediate market pressure. The yield on the 10-year US Treasury note dropped nearly five basis points to 4.279% on Wednesday, settling at 4.29% by the close.

By Thursday morning, however, it had rebounded to 4.33%. Similarly, the 30-year yield dipped to 4.74% before recovering to 4.78%.

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These movements indicate that while caution persists, fears of runaway inflation or a sharp bond market sell-off have yet to fully materialise.

On the regulatory front, Powell reaffirmed the need for a comprehensive legal framework for stablecoins like USDC and USDT, citing renewed efforts in the US Congress to draft legislation. He argued that such digital assets may have broad appeal, provided they are governed by rules that ensure consumer protection and transparency.

He also suggested that some crypto-related banking guidelines could be relaxed to encourage responsible innovation, so long as the core principles of financial stability are upheld.

QCP Capital analysts observed that amid US Treasuries and the dollar losing some of their traditional safe-haven appeal, gold has now emerged as the market’s preferred store of value, but they questioned bitcoin’s long-hailed “digital-gold” qualities.