The crypto market has turned bullish again after U.S. Federal Reserve Chair Jerome Powell hinted at the possibility of an interest rate cut. His comments at the Jackson Hole event gave Bitcoin and Ethereum a sharp boost, while overall market sentiment moved into “Greed.”
However, some traders now believe September could be a turning point for crypto.
Fear & Greed Index Climbs Back to Greed
According to the Crypto Fear & Greed Index, market sentiment climbed to a score of 60 on Saturday, up from 50 just a day earlier. This jump reflects how quickly optimism can return to crypto when the Federal Reserve signals looser monetary policy.
Just days before, the index had slipped into Fear territory, highlighting the market’s sensitivity to macro news.
Lower interest rates usually mean cheaper borrowing costs and more liquidity in the financial system. For investors, this makes risk assets such as crypto more attractive compared to holding cash in banks.
With 75% of traders on the CME FedWatch Tool now betting on a September rate cut, speculation is running high that Powell’s comments were laying the groundwork for a major policy shift.
Mixed Views Inside the Fed
Not everyone at the Fed is convinced yet. St. Louis Fed President Alberto Musalem told Reuters he still needs more time before supporting a rate cut. Even so, many in the crypto space were already preparing for a rally.
Meanwhile, crypto traders like Jason Williams had predicted that a “soft” Powell speech could trigger a sharp move upward, and that is exactly what played out.
Bitcoin and Ethereum Lead the Rally
Following the news, Bitcoin price reacted quickly, surging 5% to $117000 and wiping out nearly $400 million in short positions. Ethereum showed even greater strength, climbing 2% in just 24 hours to retest its 2021 all-time high near $4,870.
With just weeks to go until the Fed’s September meeting, crypto traders will be watching every signal closely, knowing the next decision could define the market’s direction for the rest of the year.
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FAQs
Fed Chair Powell hinted at a potential interest rate cut, making riskier assets like crypto more attractive and boosting market sentiment to “Greed.”
The September Fed meeting could define the crypto market’s direction for 2025.
Lower rates reduce borrowing costs and increase system liquidity, making risk assets like cryptocurrency more appealing than holding cash.
