Ethereum rallied strongly on Friday, gaining more than 7%, after US Federal Reserve Chair Jerome Powell hinted at the possibility of interest rate cuts in September during his final keynote address at the annual Jackson Hole symposium. Powell refrained from making firm commitments, but his softer stance signalled to investors that the Fed may be preparing to ease monetary policy in the coming months, a move that could inject fresh momentum into risk assets, particularly cryptocurrencies.
Powell’s Cautious but Softer Tone
In his highly anticipated speech, Powell acknowledged the complex state of the US economy, citing weak jobs data, persistent inflationary pressures, and the impact of tariffs imposed under the Trump administration. He noted that the Fed’s policy rate was now “100 basis points closer to neutral than it was a year ago,” and suggested that the balance of risks was shifting.
“The instability of the labour market and our unemployment rate now allows us to proceed carefully as we consider changes to our policy stance,” Powell said. “The shifting balance of risks may require us to change our policy stance.”
Although Powell avoided any outright promises of a rate cut, his remarks hinted that the central bank is increasingly concerned about employment trends. Investors interpreted this as a signal that the Fed is leaning towards easing, with September emerging as a possible timeline.
Crypto Market Reacts with Sharp Liquidations
The crypto market wasted little time in responding to Powell’s words. According to Coinglass data, total liquidations across the market exceeded $200 million in just one hour following the speech. Of this, $180 million came from short positions, with Ethereum alone accounting for $110 million in liquidations.
Crypto Short Liquidations After Powell’s Jackson Hole Speech. Source: Coinglass
This wave of forced exits underscores the sudden shift in sentiment, as traders piled into long positions, betting on continued upside. Many market participants now believe Ethereum could be on track to challenge its previous all-time highs if the Fed confirms a rate cut next month.
Altcoins and Meme Tokens Rally
Ethereum was not the only beneficiary of Powell’s remarks. Speculative tokens also enjoyed a burst of enthusiasm, with SPX meme coin climbing 15%, while PENGU and Dogecoin (DOGE) both advanced around 8%. Analysts note that in previous market cycles, periods of monetary easing and rate cuts often coincided with surging demand for meme coins, as increased liquidity fuelled speculative trading.
Biggest Hourly Gainers After Powell’s Speech. Source: CoinGecko
CoinMarketCap’s altcoin season index also jumped to 44, reflecting a broader sense of optimism in the market. While not yet signalling a full altcoin season, the index suggests growing confidence that liquidity conditions may soon improve.
Analysts: Labour Market Now Fed’s Priority
Nic Puckrin, crypto analyst and founder of Coin Bureau, said Powell’s tone represented a notable shift in the Fed’s priorities.
“Powell’s Jackson Hole speech struck a positive tone for markets, with investors now largely pricing in a rate cut as soon as September,” Puckrin explained. “He signalled that the Fed’s focus is shifting toward the growing risks in the labour market, noting the unusual slowdown in both worker supply and demand, which raises the risk of sudden layoffs and higher unemployment. While tariff-related inflation remains a concern, Powell appeared more confident that these pressures will be temporary. His comments suggest that protecting the labour market now outweighs inflation risks, giving markets clarity on the Fed’s bias toward easing.”
This clarity was welcomed by investors across financial markets, driving a bullish reaction in both equities and digital assets.
Uncertainty Still Lingers
Despite the market’s enthusiasm, Powell stopped short of confirming any imminent action. His remarks framed several hypothetical scenarios where rate cuts would become urgent but emphasised that the Fed was not yet at that stage. For now, the path of monetary policy remains conditional on upcoming data, including jobs and inflation figures over the next few weeks.
For crypto traders, however, the possibility of a September rate cut was enough to spark a renewed sense of optimism. If the Fed follows through, Ethereum and other risk assets could see further gains, but with no guarantees from Powell, the rally remains built on hope rather than certainty.
