How Powell’s last speech will impact the crypto market

1. Main Points of the Address

• Crypto Uprising Gets Backing from Potential Rate Cut Signs

Jerome Powell's statement at the Jackson Hole Symposium, quite extensively, left it up in the air that the Fed would bring a rate cut as early as September. This news was met with a bullish reaction not only in Bitcoin which went up from below $112K to about $116K–$117K, but also in Ethereum and other altcoins like XRP and Solana that made a similar upward move (Coinpedia, Investopedia).

The chances of a rate cut in September are now 87% according to the markets, which is up from 75% before Powell’s comments were made (Investopedia).

• Crypto Futures Flooded with Liquidity

Bitcoin futures on Binance were injected with liquid money to the tune of over 300 million dollars in just 15 minutes after Powell's speech, showing the immediacy of the reaction of crypto markets to macro signals (Mitrade).

• Sentiment Shifts to ‘Greed’

The turning of sentiment to "Greed" territory after Powell's dovish tone, as evidenced by the Crypto Fear & Greed Index. The rapid bitcoin gain of 5% and rise of Ethereum to 2021 highs, along with the short liquidation to a total volume of over $379 million, are the main reasons for the change (CoinTelegraph).

2. Why crypto investors should care

• Lower rates lead to riskier assets

As a rule, lower interest rates lead to a scenario whereby the cost of financing becomes less expensive, the dollar loses value and the demand for risk assets like cryptos go up (Barron’s).

• Momentum Likely to Continue

Crypto gains would be very likely to carry on as a result of the positive sentiment and the inflows of liquidity, at least for the short term, if Powell decided to continue being dovish.

3. What Could Keep the Rally in Check?

• Disappointment Risk

If Powell decided to withdraw his rate cut signals and focus on inflation, the markets might reverse their reaction just as fast. (Kiplinger, Mitrade, Axios).

• Macro Data Still Uncertain

Powell emphasized that the Federal Reserve is committed to making decisions based on data with worries about employment, inflation, and tariffs still prevalent (Federal Reserve).

• Political Pressure

The more the Fed is criticised for its independence, especially the Trump administration, the harder it will be to tell whether or not there will be more volatility as a result of the central bank’s credibility being doubted (Financial Times).

Bottom Line

The crypto market was really lifted by Powell’s latest speech, with Bitcoin, Ethereum, and altcoins all turning green on rate cut expectations. Investor sentiment has become very positive, liquidity is flowing strongly into futures, and the mood is full of optimism. Whether or not this rally will be sustainable really depends on what the Federal Reserve decides next and what the economic data tells us.