- Bitcoin and Ethereum spiked within minutes of Powell’s Jackson Hole speech, while altcoins followed with 6–7% gains.
- A September Fed rate cut now carries nearly a 90% implied probability, according to futures and prediction markets.
- Despite the rally, most cryptos remain slightly down on the week, reflecting pre-speech jitters and heavy ETF outflows.
Crypto markets lit up on Friday after Fed Chair Jerome Powell signaled that interest rate cuts may be coming sooner than expected. Speaking at the annual Jackson Hole Symposium, Powell left the door wide open for September easing—something both Wall Street and crypto traders had been itching for.
Within just 15 minutes of his speech, Bitcoin ripped higher, jumping from $112,000 to above $114,700, a quick 2.5% surge. Ethereum followed with even more heat, leaping from $4,300 to $4,600 in under half an hour, a move of nearly 7%, according to CoinGecko. Altcoins didn’t sit still either—XRP and Solana popped more than 6% in less than an hour, while Dogecoin ran up 7%. Still, despite the burst of green candles, most tokens remained slightly down on the week, reflecting the nerves that built up before Powell took the stage.
Why Crypto Reacted So Quickly
Markets know that a rate cut would flood risk-on assets with fresh liquidity. More liquidity means more capital chasing yield—and crypto tends to thrive in that environment. U.S. President Donald Trump has been leaning hard on Powell to slash rates, arguing tariffs aren’t pushing inflation higher and that cheaper borrowing costs would supercharge housing and ease government debt loads.
Prediction platforms also noticed the shift. On Myriad Linea, 87% of participants now expect the Fed to change rates in September, a sharp climb from just 70% at the start of the week. Traders are clearly moving chips in anticipation.
Powell’s Balancing Act
Powell didn’t commit outright but struck a cautious tone, saying the Fed must balance inflation risks with labor market strength. He acknowledged tariffs could still weigh on prices for months:
“It will continue to take more time for tariff increases to work their way through supply chains and distribution networks. Come what may, we will not allow a one-time increase in the price level to become an ongoing inflation problem.”
He stressed the Fed isn’t locked into any preset path, but admitted the “baseline outlook and shifting balance of risks may warrant adjusting our policy stance.” That’s as close to a green light as markets could hope for without an outright promise.
The Bigger Picture
Bitcoin and Ethereum had been under pressure earlier in the week, largely because traders were bracing for a more hawkish Powell. Bitcoin ETFs shed more than $1 billion in outflows across five days, coinciding with a sharp 10% drawdown from BTC’s $124,000 all-time high set just a week earlier. U.S. equities also softened ahead of the speech, with the S&P 500 falling 1.7% from its August peak.
Looking back, Powell defended his tenure by pointing to the drastic measures taken during the COVID-19 shock, when the Fed’s aggressive easing helped save markets but later fueled inflation to its 2022 peak of 9.1%. Today, with inflation cooling yet still sticky, Powell’s balancing act is once again center stage—and crypto traders are betting that this time, rate cuts are closer than ever.
