- Bitcoin rises 2% to $114,200 after speech.
- Ether rebounds 8% after 12% correction.
- US stocks gain 1%, yields drop to 4.27%, gold up 0.6%.
Federal Reserve Chair Jerome Powell shifted the market narrative on Friday by indicating that a September rate cut is actively being considered. The comments quickly reshaped expectations across global financial markets and prompted immediate reactions from both traditional and digital asset classes.
Delivering remarks at the Kansas City Fed’s Economic Symposium in Jackson Hole, Powell warned that downside risks to employment are rising and could intensify through layoffs and higher unemployment. That more cautious assessment of the labor market and monetary policy outlook altered investor expectations within minutes.
The change in tone rippled through markets: Bitcoin, equities, bonds and gold all moved in response to Powell’s speech as traders revised their views on the timing of Fed easing.
Bitcoin rebounds 2% after recent 10% slide
Bitcoin (BTC) climbed about 2% to $114,200 following Powell’s comments, partially reversing a sharp decline earlier in the week. The cryptocurrency had reached a record high above $124,000 roughly a week earlier, when market confidence in a September rate cut was close to certain.
As expectations cooled to around 69% in the hours before Powell spoke, Bitcoin fell nearly 10% to about $112,000. Immediately after the address, CME FedWatch data showed the probability of a September cut jumped back toward 90%, providing renewed support to digital assets that had been pressured by fading hopes of imminent monetary easing.
Ether bounces 8% after 12% correction
Ethereum (ETH) experienced even sharper volatility than Bitcoin during the same period. ETH corrected roughly 12% after nearing its all-time high, reflecting a deeper pullback in speculative tokens. Following Powell’s remarks, Ether rebounded nearly 8%, underscoring cryptocurrencies’ sensitivity to Federal Reserve signals.
The speed and magnitude of the bounce suggest traders remain highly reactive to policy expectations. Ether’s larger swings relative to Bitcoin highlight the higher risk sentiment surrounding many altcoins and the pronounced positioning around potential monetary easing.
Stocks, bonds, and commodities follow suit
Traditional markets mirrored the move in digital assets. In the days leading up to Powell’s speech, the Nasdaq Composite had tumbled about 3% as investors priced in lower odds of a near-term rate cut. After Powell signalled a shift, US stocks gained more than 1%.
Fixed income also rallied: the 10-year Treasury yield fell six basis points to 4.27% as traders increased the likelihood of easier policy. The US dollar index weakened roughly 0.5%, while gold climbed about 0.6%, reflecting flows into assets that typically benefit from expectations of looser monetary policy.
Risk markets show heightened sensitivity to Fed signals
In the run-up to Jackson Hole, traders had positioned cautiously, anticipating a hawkish tone from Powell. That caution contributed to selling pressure across risk markets, particularly in cryptocurrencies. The rapid reversal in tone not only revived expectations of a September rate cut but also highlighted the fragility of investor sentiment.
These developments emphasize how tightly risk assets remain linked to the Federal Reserve’s policy outlook. Bitcoin’s correction and subsequent bounce, together with Ether’s deeper pullback and recovery, demonstrate that digital markets move in close step with Fed communications. Equities, bonds and commodities displayed similar dynamics as investors rebalanced exposures in response to shifting rate-cut probabilities.