The cryptocurrency market witnessed a major surge on Friday after U.S. Federal Reserve Chair Jerome Powell signaled that the central bank may cut interest rates in September. His comments sent Ethereum soaring nearly 13% to over $4,814, just shy of its all-time high of $4,878 recorded in November 2021.
The momentum wasn’t limited to Ethereum. Bitcoin, the world’s largest cryptocurrency, also rallied — rising more than 4% in the past 24 hours to trade around $117,000, according to data from Binance.
In total, the global crypto market cap surged by 6% to over $4.1 trillion, reflecting renewed investor appetite for digital assets. The rally also mirrored Wall Street’s positive momentum, as the S&P 500 jumped 1.5% since Friday morning trading began.
Powell’s Comments Spark Investor Optimism
Speaking at the annual Jackson Hole Economic Symposium in Wyoming, Powell suggested that the Fed may need to reconsider its current policy stance in light of evolving economic conditions.
“The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell noted.
His remarks immediately fueled speculation that the central bank could begin easing rates as soon as September — a move that typically encourages investors to shift capital into higher-yielding, riskier assets such as cryptocurrencies and equities.
Why Rate Cuts Matter for Crypto
Interest rates play a crucial role in shaping market sentiment. Lower borrowing costs often lead investors to seek out alternative investment opportunities with higher potential returns. Cryptocurrencies like Ethereum and Bitcoin benefit from this environment, as traders see them as attractive hedges against inflation and tools for portfolio diversification.
Friday’s surge highlights how sensitive the crypto market remains to macroeconomic signals from the Fed. Traders are now assigning an 85% probability of a September rate cut, up from 72% before Powell’s speech, according to the CME FedWatch Tool.
A Week of Volatility in Crypto Markets
The excitement follows a roller-coaster week in financial markets.
- Earlier in August, optimism spread after the Bureau of Labor Statistics (BLS) reported consumer inflation rising just 2.7% year-over-year in July, a figure that came in lower than expectations. That data spurred a rally in both stocks and cryptocurrencies.
- However, optimism faded quickly when the BLS later reported a 0.9% jump in the Producer Price Index (PPI) — the sharpest monthly increase since June 2022. The unexpected spike in production costs dampened hopes for imminent rate cuts, pushing traders to scale back their exposure to crypto assets.
Against this backdrop, many market participants were closely watching Powell’s Jackson Hole speech, which has historically carried significant weight in shaping monetary policy expectations. His comments provided the clarity investors were waiting for — and triggered the latest surge in Ethereum price and Bitcoin price.
Ethereum Inches Toward All-Time High
Ethereum’s rally to $4,814 places it within striking distance of its November 2021 record. The token’s strong performance underscores its role as the second-largest cryptocurrency by market capitalization, bolstered by growing adoption of decentralized finance (DeFi), non-fungible tokens (NFTs), and Ethereum-based applications.
Analysts suggest that if macroeconomic conditions continue to favor risk assets, Ethereum could soon test or even surpass its previous peak.
The Bigger Picture
Friday’s market rebound demonstrates the continued correlation between U.S. monetary policy and the performance of cryptocurrencies. While Ethereum and Bitcoin remain the headline movers, the broader market also benefited, with altcoins and DeFi tokens seeing double-digit percentage gains.
Still, risks remain. Future inflation data, employment reports, and Fed commentary could alter market expectations once again. For now, however, investors are embracing renewed optimism, with Ethereum and Bitcoin at the center of the rally.
Conclusion
With Ethereum price just below its record high and Bitcoin pushing past $117,000, Powell’s comments have reignited bullish momentum across the crypto sector. Markets are now betting heavily on a September rate cut — a move that could usher in a new wave of capital inflows to digital assets.
Whether Ethereum can officially break its all-time high in the coming weeks remains to be seen, but for now, the Fed has delivered the kind of signal traders were hoping for.
