Federal Reserve Chair Jerome Powell shifted the market narrative on Friday by signalling that a September rate cut is under active consideration, a move that quickly altered expectations across global financial markets.

Speaking at the Kansas City Fed’s Economic Symposium in Jackson Hole, Powell highlighted that downside risks to employment are rising and could accelerate in the form of layoffs and higher unemployment.

This shift in tone sent shockwaves through both traditional and digital markets, with Bitcoin, equities, bonds, and gold all responding within minutes of his remarks.

Bitcoin rebounds 2% after recent 10% slide

Bitcoin (BTC) climbed about 2% to $114,200 following Powell’s comments, reversing part of a steep decline earlier in the week.

The cryptocurrency had touched a record high above $124,000 roughly a week ago when market confidence in a September rate cut was near 100%.

However, as expectations cooled to 69% in the hours before Powell’s address, Bitcoin slumped nearly 10% to $112,000.

Data from CME FedWatch showed that immediately after Powell’s speech, the probability of a September rate cut jumped back to nearly 90%.

This surge in confidence provided support to digital assets, which had been under pressure from fading hopes of imminent monetary easing.

Ether bounces 8% after 12% correction

Ethereum (ETH) experienced sharper volatility than Bitcoin in the same period.

The coin corrected by about 12% after nearly reaching its all-time high, reflecting a deeper pullback in speculative tokens.

However, ETH bounced nearly 8% following Powell’s remarks, highlighting how sensitive cryptocurrencies remain to Federal Reserve signals.

The rebound suggests that traders are still positioning around policy expectations, with Ether’s sharper swings reflecting higher risk sentiment.

Stocks, bonds, and commodities follow suit

Traditional markets mirrored the move in digital assets.

The Nasdaq Composite fell 3% in the days leading up to Powell’s speech as investors priced in fewer chances of a rate cut.

However, following the shift in tone, US stocks gained more than 1%.

Treasuries also rallied, with the 10-year yield falling six basis points to 4.27%.

The US dollar index declined about 0.5%, while gold prices climbed 0.6%, reflecting a broader move into assets that typically benefit from looser monetary policy.

Risk markets show heightened sensitivity to Fed signals

In the days leading up to Jackson Hole, traders had positioned cautiously, expecting Powell to maintain a hawkish stance.

This contributed to selling pressure across risk markets, particularly in crypto.

The reversal in tone not only revived expectations of a September cut but also underscored the fragility of investor sentiment.

The developments highlight how closely risk assets remain tied to the Federal Reserve’s policy outlook.

Bitcoin’s correction and subsequent bounce, along with Ether’s deeper pullback and recovery, show that digital markets are moving in lockstep with Fed communications, while stocks, bonds, and commodities reflect similar dynamics.

The post Powell puts September rate cut on the table as Bitcoin rises 2% and Fed odds swing to 90% appeared first on CoinJournal.

Powell puts September rate cut on the table as Bitcoin rises 2% and Fed odds swing to 90%

Source: https://coinjournal.net/news/powell-puts-september-rate-cut-on-the-table-as-bitcoin-rises-2-and-fed-odds-swing-to-90/

A wave of volatility swept through the cryptocurrency markets on Wednesday, as Federal Reserve Chair Jerome Powell’s hawkish remarks on inflation and tariffs sent leveraged traders scrambling.

The sudden market tremor resulted in over $200 million in liquidations in a single hour, with Bitcoin briefly dipping below the $116,000 mark.

The US central bank, as expected, left its benchmark interest rates unchanged in its latest policy decision.

However, it was Chair Powell’s subsequent comments that captured the market’s full attention. He insisted on the potential for inflationary pressures to re-emerge, particularly from the impact of trade tariffs.

This cautious stance was maintained even as two Federal Reserve officials dissented from the decision, signaling their preference for an immediate rate cut.

The crypto market’s reaction to Powell’s hawkish tone was swift and sharp. In the hour that he spoke, liquidations of leveraged positions spiked to over $200 million across all digital assets, according to data from CoinGlass.

Bitcoin (BTC) felt the immediate pressure, dipping below $116,000.

However, the sell-off proved to be short-lived. Later in the session, Bitcoin managed to bounce back above $117,000, though it was still down 0.8% for the day and continued to trade at the lower end of its tight, three-week range.

Ether (ETH) experienced a similar whipsaw, initially sliding by as much as 3% before recovering to trade at $3,750, ending the period with a modest loss of 0.6% over the past 24 hours.

Altcoins initially posted even steeper declines, with Solana’s SOL, Avalanche’s AVAX, and Hyperliquid’s HYPE tokens all dropping by 4%-5% before paring their losses.

Meme coins like BONK and PENGU plunged by as much as 10% each before also bouncing back.

This volatility in the crypto space contrasted with positive developments in the traditional stock market, where tech giants Meta (META) and Microsoft (MSFT) posted strong quarterly earnings, lifting their stocks by 10% and 6%, respectively, in after-hours trading.

‘Behind the curve’? Analysts see a Fed pivot on the horizon

Despite Powell’s cautious rhetoric, some market analysts believe the Federal Reserve may be misjudging the economic landscape.

“The market is increasingly starting to think the Fed may be behind the curve,” commented Matt Mena, an analyst at digital asset issuer 21Shares, in a market note.

“Last week’s PCE [Personal Consumption Expenditures] print marked the second soft reading in a row, and consumer spending is weakening,” Mena wrote.

With unemployment edging higher and real yields still restrictive, maintaining such tight policy risks overtightening into a broader slowdown.

Mena suggested that the current market setup is reminiscent of the last quarter of 2023, a period characterized by “softening inflation, rising political volatility, and a Fed constrained by lagging indicators.”

He argued that “the stage is set” for the Federal Reserve to eventually pivot to lower interest rates, a move that he believes could be a powerful catalyst for Bitcoin, potentially driving its price to $150,000 by the end of the year.

For now, however, the market remains caught between the Fed’s current hawkish stance and the growing expectation of an eventual, and perhaps necessary, policy shift.

The post Crypto markets see $200M in liquidations as Fed’s Powell gives hawkish remarks appeared first on CoinJournal.

Crypto markets see $200M in liquidations as Fed’s Powell gives hawkish remarks

Source: https://coinjournal.net/news/crypto-markets-see-200m-in-liquidations-as-feds-powell-gives-hawkish-remarks/