Crypto is fixated on Jackson Hole this week.
Federal Reserve Chair Jerome Powell is expected to signal whether September will bring the first rate cut of the year. If he hints at a cut, that is seen as a boon for Bitcoin, Ethereum and altcoins.
Powell’s speech on Friday “could potentially shape the outlook for the rest of 2025,” Illia Otychenko, lead analyst at CEX.IO, the crypto exchange, told DL News. “If he signals that rate cuts are back in September with more to follow, markets will likely rally across the board.”
Jackson Hole, the Fed’s annual retreat in Wyoming, is one of the most closely watched events on the central bank calendar. Powell used the forum last year to telegraph a shift toward easing.
For crypto, the gathering carries outsized weight. Digital assets are highly sensitive to liquidity conditions, and Fed policy largely determines how much capital is available.
The event comes as the crypto market trembles just below the $4 trillion mark.
Bitcoin briefly dipped below $113,000 on Wednesday, down from a record $124,500 touched on August 14. Ethereum dropped to $4,100, while XRP and Solana were down about 10% and 7% respectively over the past week.
Shares of digital asset companies followed suit with crypto exchange Coinbase down nearly 6% and investment firm MicroStrategy over 7%.
Other equities fell less sharply as the S&P 500 slipped 0.6% and the Nasdaq 1.5% while the Dow closed flat.
The divergence underscores how digital assets, reliant on speculative liquidity, are more exposed to shifts in interest rates than other investments.
“The recent market selloff is a direct consequence of escalating geopolitical tensions and a growing fear that the Fed will disappoint investors in Jackson Hole,” Kyle Chasse, founder of venture capital firm MV Global, told DL News.
The Fed has held its benchmark rate at 4.25% to 4.50% all year.
US Treasury Secretary Scott Bessent told Fox Business that the Fed should begin an easing cycle with a 50 basis-point rate cut next month.
Markets are pricing an 83% chance of a September cut, according to the CME FedWatch tool. That’s down from last week when chances were over 90%.
Lower interest rates support risk-on assets like crypto by making capital cheaper and pushing investors away from bonds and toward higher-yielding alternatives.
Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email at [email protected].
