Cryptocurrencies exploded higher on Friday, breaking a week of negative momentum. The catalyst? Federal Reserve Chair Jerome Powell’s highly anticipated speech at the Jackson Hole Economic Symposium, where he strongly hinted that interest rate cuts could be coming soon.
The reaction was immediate and powerful. The entire crypto market cap jumped 2.5% to over $3.95 trillion, led by massive moves in the two largest assets.
Bitcoin and Ethereum Lead the Charge
- Bitcoin (BTC): Spiked nearly 3% to break above $116,000.
- Ethereum (ETH): Surged an impressive 8% to reclaim $4,600.
The sudden bullish move caught many traders by surprise, triggering a massive $585 million in liquidations—an 85% increase—as leveraged short positions were wiped out.
What Did Powell Actually Say?
Powell’s speech was carefully worded but delivered a clear message to the market. While he didn’t explicitly promise a September cut, he strongly suggested the Fed is preparing to act.
His key quote: “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
In simpler terms: Interest rates are high enough to slow the economy, and the Fed is now considering cutting them to avoid slowing it down too much.
The Market’s Bet: 90% Chance of a September Cut
The market interpreted Powell’s comments as a major green light. According to the CME FedWatch Tool, the probability of a rate cut at the September meeting skyrocketed to 90%.
Powell also signaled a crucial shift: the Fed may be moving away from its strict 2% inflation target, adopting a more flexible approach. This is being read as a significantly more dovish stance, which is extremely positive for risk-on assets like cryptocurrencies.
Why This Is Bullish for Crypto
Lower interest rates make risky, non-yielding assets like Bitcoin and Ethereum more attractive to investors. When savings accounts and bonds offer lower returns, people seek higher returns elsewhere—and crypto is often a primary beneficiary.
This speech has provided the macro clarity the market was craving. If the Fed follows through with cuts in September, this could be the catalyst that propels crypto to new all-time highs in the coming months.
