Cryptocurrency markets experienced a significant surge on Friday following a speech by Federal Reserve Chair Jerome Powell that hinted at potential interest rate cuts. This dovish tone shifted investor sentiment back toward risk-on assets like Ethereum and Bitcoin.
Ether, the second-largest cryptocurrency, jumped 12% to about $4,739, nearing its all-time high from 2021's $4,866. Bitcoin also rose 3%, reaching approximately $116,191. The moves mark a strong rebound after recent volatility that saw ether dip to near $4,000 earlier in the week.
How did Powell’s speech influence cryptocurrency markets?
During his address at the Jackson Hole symposium, Powell suggested that current restrictive monetary policies might be adjusted as economic conditions evolve.
This signaled the possibility of easing, which traders responded to with increased buying across riskier assets, including cryptocurrencies.
Crypto trading firm Selini Capital’s CEO Jordi Alexander noted the sudden pivot caught many off guard, causing a rapid repositioning from risk-off to risk-on sentiment. The market’s reaction included a sharp squeeze of short positions in ether, leading to a surge in price.
Did you know?
Ethereum's price neared its 2021 all-time high of $4,866.01 after Powell’s speech, marking a remarkable recovery from a recent dip below $4,000.
What are the recent price movements of Ethereum and Bitcoin?
Ether saw a notable rebound, climbing from lows near $4,000 just days prior to almost touching its record. This surge was fueled further by the liquidation of $120 million in short positions within a single hour post-speech.
Bitcoin’s 3% gain to over $116,000 also signals renewed investor interest. Alongside price jumps, companies tied to ether accumulation, such as Bitmine Immersion and SharpLink Gaming, saw shares rise sharply.
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The impact of Federal Reserve policies on crypto investments
The Federal Reserve’s guidance on interest rates has a major impact on how investment flows. Lower or easing rates typically increase the attractiveness of speculative assets, boosting cryptocurrency demand.
Powell’s comments have reinvigorated hope that aggressive rate hikes may soon pause or reverse, which is a key catalyst for risk assets rallying.
Investor reactions and market outlook following Fed hints
While ether exchange-traded funds saw significant inflows on Thursday, overall weekly crypto fund flows remain cautious amid recent outflows. Bitcoin ETFs continue to experience outflows, reflecting a mixed short-term market sentiment.
Nevertheless, Powell’s speech has injected renewed optimism, and investors are closely monitoring economic signals and Fed actions that could sustain this rally across digital assets.
The evolving Fed stance underscores the tight interplay between macroeconomic policy and cryptocurrency valuations as markets brace for potential shifts ahead.
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