Crypto markets rebound as Powell signals potential September rate cut

Crypto sentiment returns to bullish territory after U.S. Federal Reserve Chair Jerome Powell suggested that current economic conditions may justify a shift in monetary policy. Speaking at the annual Jackson Hole economic symposium on Friday, Powell noted that inflation and labor market trends “may warrant adjusting” the Fed’s stance.

The remarks sent shockwaves through digital asset markets. According to the widely watched Crypto Fear & Greed Index, crypto sentiment returns to “Greed” with a score of 60 on Saturday, up from 50 the previous day and rebounding from “Fear” levels earlier in the week.

“Markets are clearly betting that Powell is preparing the ground for a September rate cut,” — Trading resource The Kobeissi Letter, in a market update.

Bitcoin and Ether lead gains

Bitcoin jumped 5% following Powell’s comments, trading at $117,300 after liquidating nearly $380 million in shorts, data from CoinGlass showed. Ether outperformed, surging 11.5% in 24 hours to touch $4,851 which was just shy of its 2021 all-time high of $4,878.

Jeffrey “Jiho” Zirlin, co-founder of Axie Infinity, highlighted Ether’s sensitivity to interest rate moves. “ETH is the most rate-sensitive aspect of crypto,” Zirlin wrote on X. “As interest rates drop, the spread between what can be earned by depositing your stablecoins in DeFi vs. depositing your USD in a bank widens.”

With both major assets climbing, crypto sentiment returns to levels not seen since earlier in the summer, reinforcing optimism that liquidity-driven tailwinds could reignite momentum across the digital asset sector.

Market expectations ahead of Fed meeting

Traders now see a strong probability of monetary easing in September. The CME FedWatch Tool places the odds of a rate cut at 75% for the Sept. 17 meeting. A reduction in borrowing costs typically boosts appetite for risk assets, making crypto markets particularly responsive.

Still, not all Federal Reserve officials are convinced. St. Louis Fed President Alberto Musalem told Reuters on Friday that he remains undecided. “I will be updating my outlook and balance of risks all the way up and until two days, three days before the meeting,” Musalem said.

Despite the caution, analysts argue that Powell’s speech has already shifted market psychology. “Jackson Hole will shape crypto’s direction moving forward,” — Ran Neuner, trader at Crypto Banter. “Trump is pushing for a rate cut with good reason, but will Powell listen?”

For many investors, Powell’s carefully worded remarks have been enough to drive risk-on sentiment. As a result, crypto sentiment returns as a leading indicator of market confidence heading into September.

Anticipation builds among investors

Crypto market participants had been speculating for weeks that Powell’s Jackson Hole remarks could move markets. Author Jason Williams predicted last Wednesday: “If Powell comes in soft and learns that rate cuts are likely, we turbo rip.” His call proved accurate, as the combination of Powell’s tone and strong price action reinforced that crypto sentiment returns to bullish levels when the Fed signals flexibility.

The backdrop matters: historically, Fed rate cuts have injected liquidity into financial markets, creating a favorable environment for assets considered higher-risk. For crypto investors, the possibility of easier monetary policy provides both short-term momentum and a broader narrative of resilience.

As Powell’s message reverberates, crypto sentiment returns as a reminder of how closely digital assets are tied to central bank signals. With Ether reclaiming near-record highs and Bitcoin stabilizing above $117,000, many traders see September as a pivotal month.

Looking ahead

Whether the rally sustains will depend on the Fed’s next move. If Powell and the Federal Open Market Committee deliver a rate cut, analysts expect crypto markets to benefit from renewed liquidity. If not, volatility could return swiftly.

For now, the market is moving on optimism, and crypto sentiment returns to a clear “Greed” reading, underscoring the significance of Powell’s hint. As investors weigh risks and opportunities, one theme is clear: monetary policy remains a central driver of digital asset markets.

“Every word from Powell now carries amplified weight for crypto,” — James Hartley, Associate Professor of Finance, University of Sydney. “The Jackson Hole speech shows just how much sentiment in this space can shift on central bank expectations.”

With September looming, crypto sentiment returns as the focal point for investors navigating the intersection of monetary policy and digital assets.