Cryptocurrency Prices Surge After Powell Signals Potential Rate Cuts

Jackson Hole, Wyoming — Cryptocurrency prices soared on Friday after Federal Reserve Chair Jerome Powell suggested potential interest rate cuts. Bitcoin jumped nearly 2.5%, reaching above $114,700, while Ethereum surged almost 7% to $4,600.

Powell’s remarks came during his speech at the annual Economic Policy Symposium in Jackson Hole, where he indicated that the central bank could adjust its policy stance as inflation risks remain high. “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he said.

Traders responded swiftly to Powell’s comments. Jordi Alexander, CEO of Selini Capital, noted that market positioning had shifted significantly. “Today’s setting up of a September rate cut is causing a panicked repositioning,” he said. “Momentum is back on the menu with the administration and the Fed seemingly aligned on easing.”

Short liquidations in the market surged following Powell’s speech, with around $120 million liquidated in a single hour as traders scrambled to close leveraged short positions. The moves prompted upward price adjustments, further inflating Ethereum’s value.

Stocks associated with cryptocurrencies also responded positively. Companies focused on ether accumulation saw notable jumps, with one firm up 14% and another rising 12%. However, some stocks suffered, such as one backed by Peter Thiel, which dropped over 30% after concerns were raised about its treasury practices.

Despite Friday’s gains, cryptocurrencies had experienced declines earlier in the week as traders anticipated Powell’s speech. Analysts now suggest that an interest rate cut could enhance liquidity in the market, potentially leading to a broader shift toward riskier assets.

As for Powell, he emphasized the ongoing challenges posed by tariffs and the need to prevent one-time price increases from evolving into persistent inflation issues. “We will not allow a one-time increase in the price level to become an ongoing inflation problem,” Powell stated.

In anticipation of a rate cut, investors are positioning themselves ahead of the Fed’s September meeting, a move analysts believe could significantly impact cryptocurrency prices moving forward.