Major cryptocurrencies bounced back on Friday after Federal Reserve Chairman Jerome Powell set the stage for central bank interest rate cuts in September
- Speaking at global central bankers’ annual gathering in Jackson Hole, Wyoming, Powell expressed confidence about controlling inflation which peaked in 2022.
Even though markets expected a hint of a rate cut from the Fed’s September meeting, Powell’s comments may have been more dovish than anticipated.
- Bitcoin jumped over 1.5% to $61,900 after briefly surpassing $62,000.
- Ethereum (Ξ) price rose by 2.9% to $2,685.
- Ripple’s (XRP) value added 2.4%, reaching $147.
Traditional markets also enjoyed solid gains: - The Nasdaq increased by 1.7%.
- The S&P 500 went up by 1.2%.
- Gold rose by 1%.
The Fed Funds futures dropped five basis points to 3.80%, and the US Dollar Index slipped by 0.6%.
Bitcoin often benefits from lower interest rates and increased market liquidity, leading to an inverse relationship between interest rate changes and crypto prices. When interest rates were raised in 2022, it negatively impacted bitcoin and tech stocks due to reduced market liquidity. However, a reduction in interest rates injects more liquidity into the market, which generally favors riskier assets like bitcoin.
Crypto-related stocks had strong performance throughout the day:
- Coinbase (NASDAQ:) increased by 5%.
- MicroStrategy Incorporated (NASDAQ:) added 7%, recovering from an earlier drop of around 8%.
- Iris Energy and CleanSpark (NASDAQ:) saw a slight rise of 2% and 4%, respectively.
- Marathon Digital (NASDAQ:) grew by 6.5%.
- Riot Platforms (NASDAQ:) gained 3%.
Markets currently predict a quarter-point rate cut for the Fed’s next meeting, with a 67.5% chance according to the CME FedWatch tool. There is also a 32.5% probability of a half-point reduction in rates as per Friday morning predictions.