Market Review: BTC rose from $111,000 to $117,000
The market started to show a correction in mid-August, both in the US stock market and the cryptocurrency market, mainly because the economic data released in the US was mostly better than expected, indicating that the US economy remains robust. This situation is not conducive to rate cuts, coupled with market expectations that Powell's speech on Friday would maintain a no-rate-cut stance, leading to strong risk-averse sentiment, causing the cryptocurrency market to decline, and spot ETFs recorded net outflows for five consecutive days.
However, after Powell's speech on Friday, the remarks released indicated the possibility of adjusting monetary policy, which the market interpreted as support for a rate cut in September to boost the employment market. As a result, both the stock market and the cryptocurrency market quickly returned to an upward trajectory, with BTC soaring from a low of $111,000 to $117,000, and ETH also breaking through $4,880 to set a new high, with a daily increase of nearly 15%. BNB also reached a new high, reigniting market sentiment.
Outlook for Next Week: Expectations for Rate Cuts Heat Up, Market Likely to Rise
Powell's remarks suddenly reversed market sentiment, significantly increasing the likelihood of a rate cut in September, so expectations for next week's market trends will be more optimistic. If no significant negative news occurs next week, BTC and ETH may break through new highs, and the weekend market is also worth anticipating. There are not many important economic data releases in the early part of next week, with significant impacts expected from GDP announcements on Thursday and Friday.
Currently, Bitcoin's daily line has just rebounded strongly after breaking below the trend line at $112,000, so it is expected that there will be further opportunities to break through $117,000 and return to the long-term upward trend line. At present, Bitcoin is relatively weaker compared to other coins like ETH, or in other words, it is stable in the range of $113,000 and $118,000. As long as Bitcoin does not experience a significant price drop, the trends of other mainstream coins will also be relatively optimistic.
Powell hints at possible rate cuts, highlights from Jackson Hole speech
The Chairman of the Federal Reserve, Powell, delivered a speech titled "Economic Outlook and Framework Review" at the annual symposium held by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming. The speech focused on the current state of the US economy, recent challenges, and updates to the Fed's monetary policy framework. Below is a brief summary of the main points:
Economic Outlook
Despite recent policy shifts, the US economy shows resilience but faces headwinds from higher tariffs and stricter immigration policies affecting both supply and demand.
In the first half of 2025, GDP growth is expected to slow to 1.2%, down from 2.5% in 2024, mainly due to decreased consumer spending and slowed supply growth.
Inflation
As of July 2025, the 12-month headline Personal Consumption Expenditures (PCE) inflation rate is 2.6%, with core PCE at 2.9%, higher than the previous year.
Higher tariffs lead to an increase in commodity prices, which may bring short-term inflation effects. However, long-term inflation expectations remain anchored to the Fed's 2% target.
Risks include the potential for a wage/price spiral or unanchored expectations, although this has not yet materialized.
Employment Situation
The labor market is close to full employment but shows signs of cooling, with both labor supply and demand slowing.
In the past three months, average monthly job growth was only 35,000, a significant decline from 168,000 in 2024, with recent data revisions indicating a sharper decline.
The unemployment rate has stabilized at 4.2% over the past year, but the risks of job losses are increasing, which may lead to more layoffs.
Monetary Policy
The federal funds rate remains restrictive but is approaching neutral levels 100 basis points higher than last year.
Inflation risks are tilted upwards, while employment risks are tilted downwards. The Federal Open Market Committee (FOMC) will carefully balance the dual mandate of price stability and full employment, adjusting policies based on incoming data without a preset path.
Powell stated that evolving conditions "may require" rate cuts and that caution is necessary in risk transitions.
The main highlight is the revision of the Fed's (long-term goals and monetary policy strategy statement), now emphasizing flexible inflation targets, removing explicit concerns about the effective lower bound (ELB) on interest rates, and providing clearer guidance on managing the trade-offs between employment and inflation targets. This update reflects changes in the economic environment over the past five years, aiming to enhance transparency and adaptability.
Overall, his speech maintained a balanced tone, continuing to balance inflation and employment conditions while emphasizing the need to remain vigilant in a changing environment. Market and media interpretations suggest that Powell is leaning towards a dovish turn in economic policy, indicating that the Fed may start cutting rates in September, but he still tends to depend on data, aiming to revive the labor market without reigniting inflation.
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"【MICA RESEARCH】 Powell hints at possible rate cuts, market rebounds sharply, ETH sets new high" This article was first published on Blockke.
