Ethereum's value rose by 13% to $4,738, nearing its all-time high of $4,866, after Federal Reserve Chairman Jerome Powell hinted at the possibility of interest rate cuts in September during his speech at Jackson Hole.
This move has returned cryptocurrency markets to a risk-on state, resulting in the liquidation of $120 million in short Ethereum positions within one hour. Traders with proven trading skills rushed to cover their positions, leading to a sharp price increase.
Jordi Alexander from Selini Capital stated: "The momentum is back in the spotlight," noting that the cautious signals from the Federal Reserve align with the accommodative stance of the administration - a recipe for renewed speculative flows into cryptocurrencies.
What is driving this move?
Powell's speech: The Federal Reserve acknowledged that risks may now justify an easing of monetary policy, igniting high-risk assets.
Liquidation series: Short leveraged sales flowed in, boosting Ethereum's price.
Exchange-traded fund flows: Ethereum exchange-traded funds ended a 4-day streak of outflows with inflows of $287 million on Thursday, although weekly outflows are still looming.
Stock correlation: Companies linked to Ethereum, such as Bitmine Immersion (+14%) and SharpLink Gaming (+12%), rallied alongside the currency.
A glance at sentiment
Upside: Traders are looking for a potential breakout above the all-time high if liquidity remains strong through the end of the week.
Downside: Ethereum exchange-traded funds are still on track for their largest weekly outflow ever, raising questions about the sustainability of institutional confidence.
Speculative outlook
As Ethereum approaches its all-time high again, sentiment is witnessing rapid fluctuations. If Powell's cautious tone reinforces a rate cut in September, Ethereum could become the market's preferred risk play - especially with Bitcoin exchange-traded funds declining and expectations of emerging catalysts for Ethereum betting.
Short-term traders expect pressure over the weekend. Meanwhile, long-term investors are awaiting confirmation that favorable economic factors, along with structural adoption of Ethereum, could finally drive Ethereum into uncharted price territory.
