All attention is currently focused on the Chairman of the Federal Reserve (Fed), Jerome Powell, as he prepares to deliver an important speech at the annual Jackson Hole economic conference this Friday. The speech, titled "Economic Outlook and Policy Framework Assessment," is expected to take place at 10 a.m. Eastern Time and is anticipated by investors to provide important signals regarding the Fed's next move on interest rates.

An Important Week for Crypto

This speech is seen as the highlight of an important week for the cryptocurrency market, following a series of events that could create significant volatility. Experts have outlined three main scenarios that Powell might pursue, each bringing significant impacts on financial and cryptocurrency markets.

Three Possible Scenarios

Scenario 1: Dovish signal (easing policy)

Powell may signal that an interest rate cut is imminent. According to the CME FedWatch tool, earlier the futures market had priced in a 79.2% probability that the Fed would cut interest rates in September. A dovish message would indicate that the Fed is concerned about a slowing labor market and is ready to act to support the economy.

Scenario 2: Hawkish warning (tightening policy)

Conversely, Powell may deliver a cautious message, emphasizing the re-emerging inflation pressures. New tariffs recently imposed by President Donald Trump have raised concerns about a new wave of inflation, which could lead the Fed to maintain its monetary policy. Such a hawkish scenario could make the market cautious, limit liquidity, and cause significant volatility.

Scenario 3: Neutral, data-dependent

Another possibility is that Powell maintains a neutral stance without making clear commitments. Economists at UBS predict he may only emphasize data dependence to make the final decision at the FOMC meeting on September 17.

Impact on the Crypto Market

The outcome of Powell's speech will have a strong impact on the cryptocurrency market:

  • If dovish signals emerge, lower borrowing costs will ease financial conditions, thus encouraging capital flows into risk assets like Bitcoin and Ethereum.

  • If hawkish sentiment prevails, restricted liquidity could create a new wave of volatility in the crypto market.

In fact, the Fed's policy has significantly influenced the cryptocurrency market. In 2024, during the Jackson Hole speech, Powell confirmed a willingness to cut interest rates, setting the stage for a strong rally in both the stock market and crypto.

Conclusion

Powell's speech this week is not only important for traditional financial markets but also holds significant influence over cryptocurrencies. Investors should closely monitor the signals presented to predict the direction of interest rates, liquidity, and investment opportunities in risk markets like crypto. Jackson Hole 2025 promises to be a decisive milestone for both Wall Street and cryptocurrency investors.