The cryptocurrency market found new life this Friday, seeing a sharp rebound. This burst of activity came after Federal Reserve Chairman Jerome Powell offered a surprising hint. He suggested that an interest rate cut might be coming very soon.
Speaking at the annual Jackson Hole economic symposium in Wyoming, Powell gave a clear signal. He noted that a rate cut in September could be on the table. This move would aim to support the economy. It follows growing risks in the job market. Immediately, Bitcoin (BTC) jumped back over $116,000. Ethereum (ETH) saw an even bigger leap, climbing more than 8%.
Powell’s Key Remarks at Jackson Hole
During his much-anticipated speech at the event, hosted by the Kansas City Federal Reserve, Powell made his concerns known. He pointed out that “downside risks to employment are increasing.” These risks, he said, could quickly lead to mass layoffs and a rise in unemployment. Given the current tight money policy, Powell added that “the baseline outlook and changing balance of risks could justify an adjustment in our policy stance.”
Powell did not directly confirm a rate cut. However, his words were seen as a careful opening to loosen monetary policy. This is especially important given the uncertainty from tariffs pushed by President Donald Trump. Economists expect these tariffs could temporarily affect inflation.
Bitcoin Reclaims $116,000, ETH Jumps Even Higher
This moderate shift from Powell came as a relief. Many had expected him to strike a tougher tone. Bitcoin, which had dropped below $113,000 the day before due to lower hopes for a September cut, bounced back strong. It gained 3.3%, trading at $116,630 at the time of publication, according to CoinGecko data.
The main cryptocurrency had pulled back almost 10% from its all-time high above $124,000, reached just last week. At that time, the chances of a cut were nearly 100% according to CME’s FedWatch tool. But those chances later fell below 80% as signs of ongoing inflation appeared.
Following Powell’s speech, Ethereum (ETH) saw an even larger jump, getting back above the $4,600 mark. Its impressive 8.7% rise in 24 hours currently leads the wider market gains.
The total value of the crypto market grew 3.8% during this period. Major altcoins like XRP, Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) all saw gains between 4% and 6%. This sudden rally also led to $560 million in leveraged positions being closed out, according to Coinglass data. This shows how quickly things can change in this market.
Markets React to Bigger Economic News
Before Powell spoke, the market felt uncertain. Just yesterday, minutes from the Fed’s July meeting showed divisions among central bankers. Some worried about a weaker job market. Others pointed to the risk of ongoing inflation made worse by global tariffs. Cleveland Fed President Beth Hammack echoed this cautious view.
A tense political situation adds to this picture. The Trump administration has increased its attacks on the central bank. It demands quick rate cuts. Reports have also surfaced that the president wants to replace Powell soon. On top of this, there is an ongoing investigation into Governor Lisa Cook for alleged mortgage fraud.
Traditional markets also reacted well. US stocks climbed over 1%. The yield on 10-year Treasury bonds dropped six basis points to 4.27%. The dollar index fell 0.5%, and gold gained 0.6%.
As the market takes in these new signals, investors will keep a close eye on the Fed’s next meeting in September for any firm confirmations. For now, Powell’s speech has brought a wave of optimism, reversing some of the recent losses. It reminds us how much the crypto market reacts to wider economic policy and big news events.
On platforms like Polymarket, the chances that rates will stay the same in September have now dropped to 14%. This brings them back to levels from a week ago, after they had risen to 41% yesterday. Bets for a 25 basis point cut next month are now at 81% on one of that platform’s contracts.
Sources:
https://www.cnn.com/2025/08/22/economy/fed-powell-jackson-hole-speech
https://www.coinglass.com/LiquidationData
https://polymarket.com/event/fed-decision-in-september?tid=1755796449143