After Fed Chairman Jerome Powell hinted at a possible rate cut in September, a popular cryptocurrency sentiment tracker surged back to greed status on Saturday.
The cryptocurrency market surged on Saturday after U.S. Fed Chairman Jerome Powell's dovish comments sparked speculation about a possible rate cut in September, with cryptocurrency sentiment returning to 'greed.'
The cryptocurrency fear and greed index, which measures overall cryptocurrency market sentiment, briefly fell into fear earlier this week but rose to a 'greed' score of 60 on Saturday, up 10 points from Friday's 'neutral' reading of 50.
There was a rebound after Powell's speech at the Jackson Hole annual economic symposium on Friday, in which he stated that the current inflation and labor market conditions 'may require adjustments' to the Fed's monetary policy stance.
ETH is 'the most interest rate-sensitive aspect of cryptocurrencies.'
After Powell's speech, Bitcoin surged 5% to $117,300, closing at a value of $379.88 million. Meanwhile, the price of Ether rebounded to its historical high of $4,878 in 2021, reaching a peak of $4,851, with a 24-hour increase of 11.51% according to CoinMarketCap data.
On the same day's X post, Axie Infinity co-founder Jeffrey 'Jiho' Zirlin stated that Ether is 'the most interest rate-sensitive aspect of cryptocurrencies.'
He said, 'As interest rates decline, the yield gap between depositing stablecoins in DeFi and depositing dollars in banks will widen.'
According to the Chicago Mercantile Exchange (CME) FedWatch Tool, 75% of market participants expect the Fed to cut rates at the meeting on September 17. A letter from trading resource company Kobeissi noted, 'Fed Chairman Powell seems to be preparing for a rate cut in September.'
Historically, Fed rate cuts increase liquidity and make riskier assets like cryptocurrencies more attractive.
Cryptocurrency market participants expect a surge.
However, St. Louis Fed President Alberto Musalem said on Friday to Reuters that he still needs more time to decide whether he supports a rate cut.
He said, 'I will continuously update my outlook and risk balance two or three days before the meeting.'
Earlier this week, some cryptocurrency market participants expected that if Powell hinted at a rate cut, the cryptocurrency market would soar.
Writer Jason Williams stated on Wednesday that if Powell is 'dovish and leans towards rate cuts, we will go crazy.'
Crypto Banter trader Ran Neuner stated, 'Jackson Hole will determine the future direction of cryptocurrencies,' adding, 'Trump has every reason to push for a rate cut, but will Powell listen?'
