Ethereum News Today: Jerome Powell's Dovish Shift Sparks $206M Crypto Short Liquidation Frenzy

Federal Reserve Chair Jerome Powell indicated during his Jackson Hole speech on August 22, 2025, that a potential interest rate cut could be on the table for the central bank's September meeting. Despite mixed economic signals, including elevated inflation and a fragile labor market, Powell emphasized the need to adjust monetary policy in response to shifting risks. “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he stated, suggesting openness to easing rates.

This dovish signal sparked a significant reaction in financial markets. Cryptocurrencies saw a sharp rally, with Bitcoin and Ethereum surging over 2% and 5%, respectively, within an hour of Powell’s remarks. On-chain analytics firm Coinglass reported that over $206 million in short positions were liquidated as traders scrambled to hedge against the rally. Ethereum, in particular, led the charge, with $125 million in short positions wiped out during the same period. Bitcoin short liquidations totaled $38 million, while Solana, XRP, and Dogecoin also saw substantial short-covering, totaling $15 million combined [4].

The market’s reaction reflects a growing anticipation for monetary easing, with futures markets pricing in a 73.5% probability of a rate cut in September, according to CME’s FedWatch tool. Powell acknowledged the economic uncertainty created by President Donald Trump’s aggressive trade policies, noting that the inflationary impact of tariffs may take months to fully manifest. “Tariff increases will continue to work their way through supply chains and distribution networks,” he said, while reaffirming the Fed’s commitment to maintaining price stability [1].

Ethereum, already on a bullish trajectory, reached a new all-time high of $4,867 on Coinbase, breaking its November 2021 record. The ETH price has gained over 250% since its April low, driven in part by Powell’s dovish tone. Institutional adoption also played a key role, with corporate treasuries acquiring $1.6 billion in ETH over the past month. Ether ETFs have seen significant inflows, reaching $12.12 billion in assets under management, further reinforcing the asset’s growing appeal as a reserve currency [5].

Bitcoin’s dominance in the cryptocurrency market, which had hovered around 66% in mid-2025, dipped below 60% as investors rotated into altcoins. This shift reflects a broader “altseason,” with Ethereum leading the charge in attracting capital and institutional investment. Meanwhile, Bitcoin’s market share decline signals a maturing market in which investors are seeking higher returns from diversified crypto assets [5].

The political backdrop remains tense, with President Trump continuing to pressure the Fed for rate cuts. Powell’s speech comes as the Fed’s chairmanship is nearing its end, with his term set to expire in May 2026. The Trump administration has been vocal in its criticism of Powell, including calls for the resignation of Fed governor Lisa Cook over allegations of mortgage fraud. However, Powell’s cautious approach underscores the central bank’s independence amid external pressures [2].

Source: [1] US Federal Reserve may cut rates soon, despite inflation (https://www.lemonde.fr/en/united-states/article/2025/08/22/us-federal-reserve-may-cut-rates-soon-despite-inflation_6744622_133.html) [2] Fed chair Jerome Powell signals interest rate cuts amid... (https://www.theguardian.com/business/2025/aug/22/jerome-powell-speech-jackson-hole) [4] Ethereum, Bitcoin Spike After Powell Signals Interest Rate Cut (https://finance.yahoo.com/news/ethereum-bitcoin-spike-powell-signals-143138288.html) [5] ETH Soars To New All-time High On Fed Rate Cut Signal (https://cointelegraph.com/news/eth-hits-new-highs-as-fed-turns-dovish-ether-etf-inflows-resume) [6] Bitcoin, Ethereum skyrocket after Jerome Powell's... (https://www.thestreet.com/crypto/markets/200m-in-crypto-shorts-wiped-out-in-the-hour-around-jerome-powells-speech)