Bitcoin Surges Past $61,000 as Fed Chair Jerome Powell Signals Potential Rate Cuts

by Nicholas Edwards · 23/08/2024

Bitcoin surged past $61,000 after Fed Chair Jerome Powell hinted at potential rate cuts, signaling confidence in the U.S. inflation outlook. Stocks and cryptocurrencies responded positively to Powell’s remarks at the Jackson Hole symposium.

Bollywood Fever: Bitcoin (BTC) surged beyond $61,000 following remarks from Federal Reserve Chair Jerome Powell, who expressed increased confidence that U.S. inflation is on a sustainable path back to 2%.

Powell’s comments, made during the Jackson Hole symposium on Friday, hinted that the central bank may soon begin lowering interest rates, sending positive ripples through financial markets, including the cryptocurrency sector.

“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” Powell stated during the central bankers’ conference in Wyoming.

Following Powell’s speech, the global cryptocurrency market capitalization reached $2.28 trillion, reflecting a 0.6% increase in the past 24 hours, according to CoinGecko data.

The stock market also responded positively to Powell’s dovish tones. The Dow Jones Industrial Average climbed by 417 points, or 1%, while the S&P 500 gained 1.2%. The Nasdaq Composite saw a 1.8% increase, led by technology stocks in early trading in New York.

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Probabilities of a Rate Cut in September

According to the CME FedWatch tool, there is now a 67.5% probability of a 25 basis point cut and a 32.5% chance of a 50 basis point cut in the federal funds rate at the Federal Open Market Committee (FOMC) meeting scheduled for September 18.

Jag Kooner, Head of Derivatives at Bitfinex, told The Block that Powell’s speech at Jackson Hole was a significant indicator of what to expect in September. “Today’s speech will likely set the tone for September, with investors paying close attention to Powell’s interpretation of recent data and any hints about the scale and timing of future cuts,” Kooner said.

Kooner further noted that “the broader economic indicators, such as GDP and jobless claims, suggest the economy is not in the same dire state as during the 2009 recession,” indicating that any rate cuts may be more moderate compared to previous easing cycles.

As markets digest Powell’s comments, investors will be closely watching the data in the weeks leading up to the next FOMC meeting, with Bitcoin’s recent surge highlighting the cryptocurrency’s sensitivity to shifts in monetary policy.