Ethereum News Today: Powell’s Dovish Shift Ignites Crypto and Stock Market Rally

Bitcoin and Ethereum surged amid expectations of a Federal Reserve rate cut, as Chair Jerome Powell signaled a potential shift in monetary policy during his speech at the Jackson Hole Economic Symposium. Bitcoin jumped above $117,000, while Ethereum climbed to nearly $4,700, driven by a market reaction to Powell’s remarks that hinted at a September rate reduction. The comments sent stocks and cryptocurrencies into a rally, with the S&P 500 gaining 1.3% and altcoins such as XRP and Solana surging over 6% in less than an hour [3].

Powell described the current economic landscape as a “challenging situation,” with “risks to inflation tilted to the upside” and “risks to employment to the downside.” He acknowledged that the Fed’s current monetary policy may be overly restrictive, particularly in light of a cooling labor market and recent downward revisions to employment data [3]. This marked a notable shift in tone compared to earlier in the year, when the Fed had opted to maintain rates despite economic uncertainty tied to President Donald Trump’s tariff policies [3].

The Fed’s dual mandate—ensuring stable prices and full employment—has increasingly come into tension. Powell emphasized that while inflation from tariffs is still emerging, it will likely persist for months as supply chain effects continue. However, he suggested that the central bank is prepared to adjust its stance if the labor market weakens further. Analysts highlighted that a rate cut would enhance liquidity in financial markets, which is especially welcomed by cryptocurrencies and other high-risk assets [4].

Market expectations for a rate cut were already high, with the probability of a September cut standing at 72% before Powell’s speech. By the time he concluded, this number had increased, and investors had begun repositioning portfolios in anticipation of the Fed’s next move [4]. Powell’s remarks, however, stopped short of a firm commitment to cut rates, maintaining a cautious stance by emphasizing that the Fed is “not on any preset course.” He underscored that the central bank would remain “data dependent” and would act only if economic indicators justify intervention [3].

The cryptocurrency market’s reaction to Powell’s speech underscored its heightened sensitivity to macroeconomic signals. Bitcoin and Ethereum had both declined earlier in the week amid investor caution, but Powell’s “dovish” comments triggered a reversal, with ETH experiencing $120 million in short liquidations within an hour [6]. The broader crypto ecosystem also responded positively, with Solana-focused treasuries and stablecoin issuers seeing significant gains. Ether ETFs recorded $287.6 million in inflows following the speech, reversing a week of net outflows [6].

The Fed’s decision to consider rate cuts amid a shifting economic environment reflects the broader challenges faced by central banks globally. While the U.S. labor market remains relatively strong with an unemployment rate of 4.2%, hiring has slowed, and inflation has shown signs of stubbornness. The European Union, for example, is exploring the use of public blockchains such as Ethereum and Solana for its digital euro project, signaling a potential shift away from private, closed systems [5]. This development could have long-term implications for how central bank digital currencies integrate with existing crypto infrastructure and governance models.

As Powell delivered what is likely his final Jackson Hole speech, the central bank faces increasing political and economic pressures. Trump has continued to advocate for lower interest rates, while simultaneously intensifying attacks on Fed officials, including Governor Lisa Cook, who is under investigation for alleged mortgage fraud [2]. These developments raise questions about the Fed’s ability to maintain its independence in an environment of heightened political scrutiny. Meanwhile, the market remains focused on whether the September meeting will result in a rate cut, with investors closely watching for any additional signals ahead of the decision [2].

Source: [1] Powell opens door to potential rate cut in speech (https://www.nbcnews.com/business/economy/powell-opens-door-potential-rate-cut-speech-jackson-hole-rcna226613) [2] Powell suggests rate cuts are coming — but not because (https://www.cnn.com/business/live-news/fed-powell-jackson-hole) [3] Fed Chair Jerome Powell signals path to rate cuts in (https://www.cbsnews.com/news/jerome-powell-jackson-hole-speech-interest-rate-federal-reserve/) [4] Ethereum, Bitcoin Spike After Powell Signals Interest Rate Cut (https://finance.yahoo.com/news/ethereum-bitcoin-spike-powell-signals-143138288.html) [5] The EU Shocks Crypto Markets by Exploring Ethereum and (https://www.tipranks.com/news/the-eu-shocks-crypto-markets-by-exploring-ethereum-and-solana-for-the-digital-euro) [6] Ether surges, trading close to its record again after Powell (https://www.cnbc.com/2025/08/22/crypto-market-today.html)