$113,000 after briefly rallying on Federal Reserve Chair Jerome Powell’s Jackson Hole remarks. While his comments initially lifted investor sentiment, optimism quickly faded as markets reassessed the Fed’s cautious stance on monetary policy.
Following Powell’s speech, risk assets surged. His remarks, although hawkish on paper, hinted at
growing concerns over employment, fueling speculation of a September rate cut.
Bitcoin gained 4% and Ethereum jumped 13% as traders interpreted the tone as more dovish than expected.
The Fed also signaled the end of its “Average Inflation Targeting” framework, marking a significant
policy shift. Despite the tighter conditions implied, Powell’s repeated references to labor market risks
reassured investors that slowing growth could push the Fed toward easing.
He also played down inflationary concerns linked to President Donald Trump’s tariff
policies, calling them temporary. This helped calm fears that short-term price shocks would block
easing measures.
September Rate Cut Speculation Intensifies
James Bullard, former St. Louis Fed President, suggested Powell’s speech hinted at a likely
25-basis-point cut in September, with room for further reductions in 2026.
However, some Fed officials warned against premature moves. Kansas City Fed President Jeffrey Schmid
argued inflation remains closer to 3% than the 2% target, while Cleveland Fed President Beth Hammack
stressed she would not support a cut if the decision were made immediately.
Powell himself cautioned that a single rate cut should not be seen as the start of a prolonged easing
cycle, highlighting the Fed’s measured approach.
Ethereum Outperforms as Bitcoin Struggles
Despite initial optimism, Bitcoin ended last week down 2.56%, losing nearly $10,000 in value over ten
days. In contrast, Ethereum rose nearly 9% during the same period, supported by renewed activity from
Digital Asset Trading firms and more resilient ETF flows.
Data from Farside Investors showed Bitcoin spot ETFs faced heavy net outflows of
$1.178 billion last week, compared to Ethereum ETF withdrawals of $241.1 million.
Analysts at VanEck remain bullish, predicting Bitcoin could reach $180,000 by
year-end, but short-term momentum is favoring Ethereum.
Market Outlook: All Eyes on Inflation Data
At the start of Asian trading on Monday, Bitcoin briefly recovered above $113,000 after hitting a
six-week low of $110,600, but selling pressure soon pushed it lower again. Ethereum and other altcoins
mirrored the decline.
Traders are now focused on the upcoming August PCE inflation report as the next key
indicator. Powell has left the door open to a September rate cut, but his guarded tone suggests the Fed
may wait for further economic signals before acting.
For now, market sentiment in the coming days will be crucial in determining whether Bitcoin stabilizes
or continues facing downside risks.
