The cryptocurrency market began the week with a sharp reversal, as Bitcoin fell below $113,000 following comments from Fed Chair Jerome Powell. While Ethereum showed gains, market sentiment remains mixed.
Market Reaction to Jerome Powell's Speech
Jerome Powell's speech at the Jackson Hole symposium initially sparked optimism in the markets, lifting the value of risk assets. Despite the hawkish tone, Powell's remarks hinted at employment concerns, raising speculation of a possible rate cut in September. Bitcoin gained 4% and Ethereum surged 13% as traders interpreted the tone as more dovish than expected.
Speculation on September Rate Cut
Former St. Louis Fed President James Bullard 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. Powell cautioned that a single rate cut should not be seen as the start of a prolonged easing cycle.
Comparing Bitcoin and Ethereum
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 trading firms. Data showed Bitcoin faced heavy net outflows from ETFs totaling $1.178 billion, compared to Ethereum’s withdrawals of $241.1 million. Analysts at VanEck remain bullish, predicting Bitcoin could reach $180,000 by year-end.
The cryptocurrency market continues to experience uncertainty. Investors are closely monitoring Bitcoin and Ethereum, as well as upcoming economic signals. The present time will be crucial in determining Bitcoin's stability and its ability to withstand further pressure.
