Is Bitcoin’s Surge to $116K the Calm Before a Fed-Triggered Crypto Storm?
Ever wonder what happens when Wall Street’s big guns give a nod toward easing monetary policy—does Bitcoin just casually decide to race up the charts? Well, that’s exactly what we’ve witnessed as Bitcoin soared past $116,000, riding a wave of optimism sparked by Fed Chair Jerome Powell hinting at possible rate cuts. It’s almost like the crypto market caught a whiff of fresh air, prompting Ether, XRP, and other digital assets to push higher alongside it. Is this the start of a new chapter where central bank caution turns into investor cheer? Let’s dive into how Powell’s data-driven approach and the looming specter of inflation pressures are reshaping the crypto landscape and what it means for savvy investors watching every tick of the market. LEARN MORE.
Powell’s approach sparks optimism among digital asset investors, amid signals that rates may ease as inflation pressures cool.
Photo: Annabelle Gordon
Key Takeaways
- Bitcoin surged above $116,000 following Federal Reserve Chair Powell’s signal of possible rate cuts.
- Powell emphasized a data-driven approach to monetary policy, citing resilience in the economy and ongoing inflation concerns.
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Bitcoin climbed over 3% on Friday to trade above $116,000 as optimism in crypto markets picked up after Federal Reserve Chair Jerome Powell gave a cautious signal that the central bank could move toward lowering interest rates.
Speaking at the Fed’s Jackson Hole event, Powell noted that inflation is still “somewhat elevated” but has eased substantially from post-pandemic highs.
The Fed is facing a delicate balance, he said, with upside pressures on inflation and downside pressures on employment. He added that the current policy rate is closer to neutral and the labor market is stable, giving the Fed room to proceed cautiously.
“The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said.
“Monetary policy is not on a preset course. FOMC members will make these decisions based solely on their assessment of the data and its implications for the economic outlook and the balance of risks,” Powell stressed.
According to the central bank leader, tariffs could push inflation higher, but the base case is that price increases will be short-lived. The Fed remains vigilant against stagflation and is committed to its 2% inflation target.
Powell’s remarks quickly lifted crypto and stock markets as investors read the speech as more dovish than expected.
Bitcoin hit $116,000 after retreating below $112,000 earlier this week in anticipation of Powell’s hawkish stance, while other major crypto assets also moved higher following the speech.
Ethereum jumped 7% to $4,600. XRP, Solana, and Chainlink each gained over 6%, while Dogecoin and Cardano rose around 8% on the speech.
The total crypto market capitalization surpassed $4 trillion, rising by 2% in a day.
Traders are now overwhelmingly betting the Fed will deliver a quarter-point rate cut in September, with odds lifting to nearly 90% from just 75% in the previous session, according to FedWatch Tool data.
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