While Powell’s stance supports a crypto rally, potential risks include corporate treasury adoption challenges and equity market volatility.
Cryptocurrencies surged late Friday after Federal Reserve President Jerome Powell struck a dovish tone at the Jackson Hole economic symposium, defying market expectations for a more hawkish stance. That has prompted asset managers to call for new all-time highs for bitcoin BTC$115,944.43, ether (ETH) and select altcoins.
In one of his most important speeches, Powell suggested that the labor market could benefit from lower borrowing costs, having held the benchmark interest rate steady at 4.25% for eight months.
“Downside risks to employment are rising,” Powell said in prepared remarks for his keynote speech at the Jackson Hole Symposium, adding that the possibility of President Donald Trump’s tariffs having only a short-lived effect on inflation is “reasonable.”
“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he noted.
Cryptocurrencies and stocks soared, and the probability of the September Fed rate cut jumped to 90% following the speech. Most analysts expect the momentum to continue in the days ahead.
Analysts at Monarq Asset Management anticipate that ether’s price will rise above $5,000 in the coming days.
“We maintain our overall bullish stance. Market internals remain constructive, with few signs of overheating and, as you point out, a clear path to new all-time highs in both BTC and ETH,” Sam Gaer, chief investment officer of Monarq Asset Management’s Directional Fund, told CoinDesk.
“Our house view is that Powell’s dovish pivot has cleared the way for $5,000+ in the near term (also not the hardest call to make). Demand from treasury vehicles should increase into the fall as many of the deals announced this summer close or de-SPAC, in addition to ongoing institutional and retail inflows,” Gaer added.
Ethereum’s native token ether has already gained nearly 10% in 24 hours, hitting record highs above $4,800. As of writing, it changed hands at $4,700, according to CoinDesk data. Meanwhile, market leader bitcoin traded near $115,600, slightly down from the overnight high of $117,400.
Data from Deribit-listed options shows that ether’s rally has sparked renewed demand for upside bets, or call options. At press time, risk reversals were positive across all tenors, implying relative richness of calls. The sentiment wasn’t so bullish in BTC options.
Gaer stated that over-the-counter desks and market makers are experiencing stronger demand for ETH compared to BTC, suggesting that ether may outperform ahead.
That said, BTC looked strong on its own too. “The BTC pullback from ATH was ~9.6% — far less than earlier drawdowns this year — indicating strong demand, as evidenced by whale wallet accumulation around the $113k level,” Gaer said.
Spencer Yang, managing partner at BlockSpaceForce, a crypto treasury advisory firm, said more rate cuts could happen after September, ensuring the momentum extends well into the year-end.
“We’re now fully expecting rate cuts to happen in September. It will be the first cut since Trump became President this year. This is significant, and many more will come,” Yang said, calling new highs in the crypto market.
“The major 5 that we pay attention to: BTC, ETH, BNB, SOL, LINK. These will do well given the various parts of the crypto industry they impact,” Yang added.
Steve Lee, co-founder and managing partner at Neoclassic Capital and investor in BlockTower Capital, called Powell’s dovish turn a short-term constructive development for cryptocurrencies while stressing the importance of continued inflows into bitcoin and ether spot ETFs.
“I see this as constructive in the short term, and it may help reverse this week’s sell-off. The key question is whether this momentum holds beyond the low-liquidity weekend. Since BTC and ETH price action is increasingly institutionally driven, spot ETF flows today and Monday will be a strong indicator of whether we are set for another leg higher,” Lee told CoinDesk.
Lee highlighted Base, Monad, Story, and SUI as key projects of interest that he is closely monitoring in his capacity as an early-stage venture capitalist.
Gaer, meanwhile, favored Solana and the SOL ecosystem, including high-beta SOL tokens such as JITO and JUP. Raydium and PUMP on both a “fundamental and forward-demand basis.”
While Powell’s dovish stance has set the stage for a rally, traders should remain cautious about potential pitfalls from corporate treasury cryptocurrency adoption and volatility in equity markets.
“Digital asset treasuries (DAT) are an innovative vehicle for public market investors to gain exposure to the digital asset space. However, we have started to see the quality of DAT deals – from banking relationships, compliance, management team, and deal structure perspectives — dropping, which shows early signs of a ‘bubble,” Lee said.
Naqsdaq-listed Strategy started this trend of corporate BTC adoption in 2020. Since then, more than 100 publicly-listed firms have accumulated a total of 984,971 BTC, according to data source Bitcoin Treasuries.
“The trend may continue, but it is obvious that the risks associated with this are not ignorable,” Lee added.
Gaer called for closely tracking risks from an overheated equity market and “potential for macro or geopolitical shocks.”
