Focus shifts toward the upcoming Federal Reserve meeting following Bitcoin's recent price drop
In a significant development for the financial world, Federal Reserve Chair Jerome Powell's speech at the 2025 Jackson Hole Economic Policy Symposium signaled a likely interest rate cut at the Federal Reserve's September meeting. This shift towards easing comes amid a slowing labor market and persistent inflation risks.
Powell's speech emphasised the delicate balance between rising inflation risks and weakening employment, suggesting a "proceed carefully" approach but one that may "warrant adjusting our policy stance." This has increased market expectations of a 25 basis point rate cut at the September 17 meeting, the first since December 2024.
Powell’s message reaffirms the Fed’s independence and its data-driven policy framework amid domestic and global economic uncertainties. The upcoming central bank gathering is considered a significant event by Greg Magadini, director of derivatives for digital asset data provider Amberdata.
Impact on Bitcoin and Cryptocurrencies
The expectation of a September rate cut has fueled hopes of increased liquidity and investor appetite for riskier assets, which could boost crypto prices. Historically, easing Fed policies have tended to support rallies in Bitcoin and altcoins by lowering borrowing costs and increasing market liquidity.
However, Powell’s speech also highlighted ongoing inflation concerns and a balanced, cautious stance, which contributed to some short-term declines in Bitcoin, as markets test the Fed's patience and wait for clearer signals. Crypto markets remain sensitive to Fed policy signals; thus, any signs of persistent inflation or delayed easing could suppress crypto gains, whereas more aggressive rate cuts could spur renewed rallies.
Market Reactions
Tom Bruni, editor-in-chief & VP of community at Stocktwits, stated that the September Fed meeting has become a key focus for traders and investors. Bitcoin reached a fresh, all-time high of over $124,000 earlier this month, according to Coinbase data from TradingView. However, it dropped below $115,000 on August 18, due to significant profit taking, according to analyst Ryan Rabaglia.
Joe DiPasquale, CEO of BitBull Capital, emphasized that Fed rate-cut expectations and inflation data remain critical drivers of risk appetite in the crypto market. Brian Huang, cofounder of fintech firm Glider, offered an angle that investors are rotating into altcoins, specifically Ethereum (ETH) over the past couple of weeks. He also suggested keeping an eye on Solana digital asset treasuries, as growth here could once again dampen BTC price and dominance as traders rotate from BTC and ETH into SOL.
Brett Sifling, wealth manager for Gerber Kawasaki Wealth & Investment Management, highlighted the ongoing progress in the regulatory framework surrounding digital assets. He stated that it's important for market participants to monitor the ongoing regulatory developments happening, such as the GENIUS Act, The CLARITY Act, and the Anti-CBDC Surveillance State Act.
In summary, Powell’s Jackson Hole speech strongly suggests a September rate cut, leaning toward more accommodative Fed policy, which could benefit Bitcoin and cryptocurrencies through enhanced liquidity and risk appetite, though ongoing inflation concerns and global economic uncertainties temper immediate expectations.
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