On Saturday, the cryptocurrency market saw a resurgence of investor 'greed' following a speech by Federal Reserve Chairman Jerome Powell. The official hinted at the possibility of a rate cut in September. The fear and greed index rose to 60 points, indicating a shift in market participants' sentiments. Just on Friday, the figure was at 50 points in the neutral zone, and earlier in the week it had dropped to zero, expressing extreme fear.
Amid positive news, the price of Bitcoin rose by 5% and reached $117.3. In such conditions, sellers faced a significant liquidation of positions, exceeding $37 million. Ethereum showed an even more pronounced dynamic, gaining 11.5% in a day and reaching $4851. Currently, Ethereum is very close to its historical maximum, which was set in 2021 at $4878.
Axie Infinity co-founder Jeffrey Zirlin noted Ethereum's particular dependence on the Fed's monetary policy. According to him, when the key rate is lowered, the disparity between the yields of stablecoins in the DeFi segment and the yields of dollar deposits in banks increases, making Ethereum a more attractive asset from an investment perspective.
According to CME FedWatch data, there is a high probability that the key rate will be lowered at the Fed meeting on September 17. The analytical platform The Kobeissi Letter stated that Powell is essentially laying the groundwork for such a step.
Historically, easing monetary policy has contributed to increased liquidity and heightened interest in riskier assets, including cryptocurrencies.
However, within the Fed itself, officials' opinions remain quite ambiguous. The president of the Federal Reserve Bank of St. Louis, Alberto Musalem, emphasized in an interview with Reuters that he needs more time to assess the economic situation. According to him, he is only ready to draw final conclusions a few days before the regulator's meeting.
