Key Takeaways
Bitcoin rallied about 5% on Friday after Powell’s dovish tilt. However, a few hours later, markets appeared split on the September rate cuts.
Bitcoin [BTC] bounced back about 5% to $117K immediately after a surprising dovish stance by Fed chair Jerome Powell during the Jackson Hole Symposium on the 22nd of August.
Powell hinted at a September rate cut, citing labor-market risks, even as he stressed persistent inflation pressures.
“In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation…Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
Market digests Powell’s remarks
Immediately after the speech, CME FedWatch showed the probability of the 25th of September BPS rate cut rising to above 90%.
Source: CME FedWatch Tool
BTC also exploded from $111.6K to above $117K on Friday, with leveraged bulls riding on the wave, as shown by the sharp spike in Open Interest (OI).
About $300 million flowed into Binance derivatives in minutes after the speech.
Source: CryptoQuant
However, by press time, BTC had cooled to $116K as markets digested Powell’s remarks.
Mixed views from market voices
For his part, Roshan Robert, CEO of OKX U.S., told AMBCrypto that rate cuts would improve ‘investor appetite’ for crypto.
“Rate cuts don’t just ease financial conditions — they unlock investor appetite. As liquidity returns, we expect to see deeper markets, tighter spreads, and higher volumes with OKX customers. It’s in these moments that crypto proves it’s moving from hedge to core asset.”
However, Katalin Tischhauser, Head of Research at Sygnum Bank, viewed Powell’s speech as ‘contradictory.’
While the Fed chair singled out unemployment risk, Tischhauser noted that he also said that the labor market was ‘in good shape.’
“This mixed messaging might leave observers unsure whether he was seriously considering a cut or simply bowing to external pressures.”
But Tischhauser told AMBCrypto that the crypto market could extend its rally despite the uncertainty.
What to expect next week
That said, the rally appeared to have been driven by leverage, as spot BTC ETFs saw a daily outflow of $23.15 million on Friday, bringing weekly outflows to $1.17 billion.
In addition, retail demand also dipped lower as shown by the Coinbase Premium Index, further underscoring a risk-off sentiment amongst U.S. investors.
Source: CryptoQuant
That said, next week, the U.S. unemployment claims on the 28th of August, will give more clarity on the labor market and September rate cuts.
Since it’ll eventually affect BTC moves and whether it can reclaim $120K, it will be worth tracking.