Written by: 1912212.eth, Foresight News
On the evening of August 22, Fed Chair Powell's speech finally injected a shot of adrenaline into the precarious crypto market. At the Jackson Hole annual meeting, Powell stated that the shift in risk balance may require policy adjustments, indicating that the outlook for employment risks is rising. The market understands that Powell seems to be preparing for a rate cut in September.
Affected by this positive news, BTC quickly regained the $112,000 mark, rising 2.95% in one hour, briefly climbing above $117,000. ETH's performance was even more impressive, soaring from around $4,200, finally reaching a historic high of $4,887.59 around 5 AM on August 23. The ETH/BTC exchange rate rose to 0.0418, hitting a new high since October 2024. Many altcoins benefited from the strong recovery of the market.
Regarding contract data, Coinglass shows that over the past 24 hours, the total liquidated contracts across the network exceeded $694 million, with short positions liquidated over $468 million.
Powell's softened stance raises market expectations for two rate cuts within the year.
Before Powell's speech, the market's pessimistic expectations may have turned hawkish, and some traders chose to stand aside and observe, leading to a significant drop in the crypto market before the conference.
Surprisingly, Powell's significant speech stated that the current situation implies rising downside risks for employment. This shift in risk balance may indicate the need for rate cuts.
Powell mentioned that stable labor market indicators like the unemployment rate allow the Fed to cautiously consider adjusting its monetary policy stance, opening the door for a rate cut in September.
According to CME 'FedWatch' data, after Powell's speech, the probability of a Fed rate cut in September increased to 91.2%.
(Wall Street Journal) Notable journalist Nick Timiraos, known as the 'Fed's mouthpiece,' reported that Fed Chair Powell opened the door for a rate cut as early as next month's meeting, stating that the job market may face a more severe slowdown, which could alleviate concerns about inflation driven by rising costs from tariffs. However, Powell's remarks emphasized concerns about inflation, tempering the market's expectations for the Fed to aggressively cut rates consecutively. Inflation has been above the Fed's 2% target for more than four consecutive years.
Deutsche Bank expects the Fed to cut rates by 25 basis points in September and December, while previously the bank predicted the Fed would only cut rates in December 2025.
Nationwide Chief Economist Kathy Bostjancic stated that the Fed will cumulatively cut rates by 75 basis points before the end of the year. She pointed out: 'Powell adopted a clearly more dovish tone and opened the door wide for a rate cut in September, indicating that downside risks for employment are significantly rising. This supports our judgment of a 25 basis point cut next month, and we continue to expect the Fed to cumulatively cut 75 basis points by the end of the year as the labor market weakens further, while inflation rises only moderately and temporarily.'
According to The Kobeissi Letter's analysis of Fed Chair Powell's speech today: 'Today's speech indicates that their (the Fed's) primary focus has shifted to supporting the labor market. Changes in the risk balance may require policy adjustments, referring explicitly to the labor market. Therefore, the employment report will determine future rate cuts.'
The Fed's next interest rate decision will be announced at 2 AM Beijing time on September 18.
Ethereum spot ETF and stablecoin data show optimistic performance
As one of the important indicators for monitoring market capital flow, the data for Bitcoin spot ETF is not optimistic, with significant net outflows in recent days, reflecting a strong market risk-averse sentiment.
However, the Ethereum spot ETF has seen a net outflow for four consecutive days, but on August 21, it turned back to a net inflow of $287.61 million. The total net inflow currently stands at $12.09 billion. It is not difficult to see that the market may be betting on Ethereum for higher returns.
Stablecoin data continues to flow in.
According to defiLlama data, the current total market value of stablecoins is $277.74 billion, with a total increase of 0.96% over the past week, amounting to $2.645 billion. Among them, USDT's monthly increase is 2.6%, USDC's monthly increase is 4.63%, and USDe's monthly increase is 80.87%.
In addition, the popular project WLFI's token will launch trading and initial claims on September 1 at 20:00, allowing early supporters to claim 20% of their share simultaneously, and will be listed on DeFi DEX and major CEX. As a DeFi project supported by the Trump family, WLFI carries political significance, and its token trading launch may attract significant attention from politically inclined cryptocurrency investors, especially local U.S. users, helping to boost the market in the short term and inject liquidity.
Market views
Former Goldman Sachs executive and Real Vision founder Raoul Pal released a technical analysis suggesting that Total3 (altcoins excluding BTC and ETH) is about to reach a turning point.
Data analysis firm Altcoin Vector indicated that as ETH provides upward momentum and a ripple effect for other tokens, once ETH stabilizes above its historical high, altcoins may experience a full breakout.
Weiss crypto analyst Juan stated that ETH needs to break $5,000 before a frenzy in altcoins can commence, with the peak of this round of increases likely occurring between September 13 and 20, with the latter being more probable. Before that, the overall market is expected to trend upwards.
