There was plenty of nervousness ahead of Jerome Powell’s speech at the Jackson Hole summit, but one thing is clear: traders liked what they heard.
The Federal Reserve chairman confirmed the central bank will “consider changes to our policy stance” — in other words, indicating interest rates could come soon.
He pointed to a stable unemployment rate and promising economic data as key factors that will allow the cost of borrowing to be reduced. However, inflation continues to be a worry in the wake of Donald Trump’s tariffs.
Powell’s language was deliberately cautious. He warned policymakers will be proceeding carefully in the months ahead, and left himself plenty of wriggle room to change course if required.
But reading between the lines, analysts are now pretty confident that we’ll see the Fed’s base rate tumble by 25 basis points following their meeting next month — marking the first reduction in the U.S. so far this year.
During his final speech as chairman in Jackson Hole, Powell made it clear that his changing outlook had nothing to do with Donald Trump, who has wanted lower interest rates for months and called for the chairman’s resignation.
The president’s response was blunt to say the least, quipping: “We call him ‘Too Late’ for a reason.”
Reaction to Powell’s address was immediate in the crypto markets. Bitcoin immediately vaulted from $112,000 to highs of $117,000, but at the time of writing, it’s settled back down towards $115,000.
The real star of the show in Friday’s rally was Ether. After four years of waiting, the world’s second-largest cryptocurrency finally hit all-time highs on some exchanges, prompting celebration on X. ETH surged by 15% in a little under three hours.
Although that’s certainly an impressive performance, there’s an important note worth adding here: officially, there hasn’t been a new ATH. According to CoinMarketCap, that remains at $4,891.70 — as seen on November 16, 2021. Its data suggests Friday’s peak was just $7.47 off record territory.
Ether wasn’t alone in notching up double-digit returns, either. Solana, Dogecoin, Cardano, Sui, Avalanche and Polkadot also accelerated by more than 10% in a sign that appetite for riskier assets is growing.
An interest rate cut would be significant — for many reasons. It makes government borrowing less expensive, and drives down the cost of everything from mortgages to credit cards. But crucially, it also reduces the return on savings in traditional bank accounts, prompting investors to seek healthier returns elsewhere.
Of course, it wasn’t just the crypto world that was basking in the glow of Powell’s speech. The Dow raced to its first record high of 2025, rising by 846 points in a single trading session. And the S&P 500, which had suffered losses for five days in a row before Friday, closed up 1.52% — its best day in three months. It’s also worth paying close attention to the Nasdaq 100, a tech heavy index, up 1.88%.
Data now suggests there’s an 81% chance of a rate cut from the Federal Open Markets Committee, compared with 75% before Powell’s speech. We’ll find out for sure following their meeting on September 16 and 17.
Beyond the macroeconomic ramifications, the recent price activity exposes a pretty fascinating trend in the crypto markets: Ether seems to be more popular than Bitcoin right now.
Both are available in ETF form on Wall Street. Data from SoSoValue shows BTC products actually suffered outflows of $23 million on Friday. By contrast, ETH funds witnessed inflows of $337.6 million.
Analysts are arguing that exchange-traded funds have played a huge role in dampening Bitcoin’s volatility, meaning smaller cryptocurrencies are more attractive for traders chasing short-term returns. Etherealize founder Vivek Raman told Bloomberg:
“For many traders, the Bitcoin trade has already played out. Ethereum still feels under-owned, more volatile, and more reactive.”
Of course, Bitcoiners would vehemently disagree with this — and many confidently predict that the world’s first cryptocurrency is firmly on a path to $1 million in the next few years — and will eventually surpass the market capitalization of gold.
Given how that would involve a 769% jump from current levels, they assert Bitcoin’s still at an early stage, and the trade has plenty of room left to run. With treasury companies now snapping up coins far faster than they can be mined, it could be argued BTC’s current value doesn’t reflect the very real supply squeeze that’s unfolding.
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