Fed Hints at Rate Cut Lift Crypto Sentiment as BTC, ETH Rally
Federal Reserve Chair Jerome Powell’s dovish remarks at the Jackson Hole symposium revived crypto sentiment, sending the Crypto Fear & Greed Index from Neutral (50) to Greed (60) on Saturday. This resurgence in crypto sentiment coincided with a 5% spike in Bitcoin to around $117,300, liquidating $380 million in shorts. Ether surged over 11% to reclaim its 2021 all-time high near $4,878. Axie Infinity co-founder Jeffrey Zirlin noted Ether’s sensitivity to rate moves as lower interest rates widen DeFi yields over bank deposits. The CME FedWatch Tool shows 75% odds of a September rate cut. While some Fed officials, like St. Louis Fed President Alberto Musalem, remain cautious, traders had anticipated a market rally if Powell leaned dovish. The reaction highlights how rate-cut expectations can boost liquidity and risk appetite in crypto markets.
Bullish
Powell’s dovish tone at Jackson Hole immediately shifted market psychology, lifting the Crypto Fear & Greed Index into ’Greed’ territory. Historically, Fed rate cuts or hints thereof inject liquidity and lower borrowing costs, making risk assets more attractive. Bitcoin’s 5% surge and Ether’s 11% rally reflect short-squeeze dynamics and renewed risk appetite. Market odds for a September rate cut rose to 75%, reinforcing bullish momentum. Comparable spikes occurred after past Fed pivots in 2020 and 2023 that fueled crypto rallies. In the short term, traders may chase further gains, but long-term stability depends on inflation data and actual Fed actions. Continued dovish signals could sustain the uptrend, while any hawkish surprises may trigger profit-taking.