- Powell’s Jackson Hole speech hinted at potential rate cuts, sparking a crypto rally.
- Bitcoin jumped 4K in minutes, Ethereum gained 7%, while altcoins and crypto stocks followed higher.
- Prediction markets now price in nearly 90% odds of a cut in September.
Crypto markets lit up on Friday after Federal Reserve Chair Jerome Powell hinted at the possibility of a rate cut next month during his Jackson Hole remarks. Traders, who had braced for a hawkish tone, instead got just enough dovish language to breathe life back into risk assets.
Bitcoin spiked quickly, bouncing from morning lows near $112,000 to around $116,500, while Ethereum surged almost 7% to $4,600. Altcoins followed suit—Solana gained momentum, and XRP reclaimed $3. Even crypto-related equities got a bump, with MicroStrategy (MSTR) climbing more than 5% and Coinbase (COIN) up nearly 7%.
Powell’s Shift in Tone
For most of this year the Fed has kept rates unchanged, pointing to a still-solid jobs market and sticky, tariff-driven inflation. But Powell’s tone at Jackson Hole signaled a crack in that stance.
“Overall, while the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising,” Powell said. He added that “the shifting balance of risks may warrant adjusting our policy stance,” opening the door to easing as early as September.
Fundstrat’s Tom Lee chimed in on X shortly after, saying Powell’s speech came off “as dovish, as expected.”
Traders Swing Back Into Risk
Earlier in the week, crypto markets had been weighed down by expectations of tougher Fed language. Spot Bitcoin saw selling pressure as traders hedged for disappointment. But Powell’s remarks flipped sentiment quickly. With lower rates seen as fuel for liquidity, crypto and equities both rallied on the prospect of fresh inflows.
Prediction markets moved fast too. On Polymarket, bets on a September quarter-point cut surged to roughly 80%, up from 56% just before the speech. CME’s FedWatch tool now shows an 87% probability of a cut, compared to 75% the day before.
The alignment between crypto traders—who were already leaning dovish—and traditional finance expectations is now much tighter than it was even a week ago.
Market Outlook
Despite the rally, investors are keeping one eye on inflation. Powell cautioned that tariff-driven price hikes haven’t fully filtered into the economy yet, and they could linger for months. Still, for crypto markets, the bigger story is liquidity. Rate cuts would almost certainly juice demand for Bitcoin, Ethereum, and the broader altcoin space.
For now, BTC is holding steady above $116,000, ETH is holding its gains, and traders are bracing for more volatility as the September FOMC meeting approaches.
