Crypto markets surged as Powell hinted at a September Fed rate cut, with Ethereum nearing records, Bitcoin steady, and Chainlink decoupling while on-chain data warned of risks.
Crypto markets buzzed as investors reacted to hints of a potential US Federal Reserve rate cut in September.
Social media chatter is surging, said sentiment platform Santiment, following dovish remarks by Fed Chair Jerome Powell at the Jackson Hole symposium.
While Ethereum [ETH] led the rally, touching $4,834, Bitcoin [BTC] hovered near $117,000, aiming for $120,000.
Chainlink [LINK] also impressed, hitting $27.11, a year-to-date high, decoupling from broader trends
This highlighted how Powell’s signal of monetary easing fueled a classic “buy the rumor” surge across crypto markets.
Well, the link between crypto and traditional markets strengthened with the S&P 500 hitting a new all-time high alongside Bitcoin and gold, highlighting the market’s sensitivity to Fed signals.
Social sentiment also offered further insight — before the recent rally, negativity among retail traders hit its lowest level since July, a classic contrarian sign that a market bottom was near.
Yet, caution lingered as chatter around terms like “Fed,” “rate,” and “cut” has surged to an 11-month high, reflecting both excitement and anxiety over a potential rate cut.
Santiment noted,
“Historically, such a massive spike in discussion around a single bullish narrative can indicate that euphoria is getting too high and may signal a local top.”
Meanwhile, on-chain and sentiment data paint a nuanced picture for crypto.
Bitcoin showed optimism in social chatter, but utility metrics such as Active Addresses and transaction volume cooled, while Supply on Exchanges rose — hinting at potential selling pressure.
On the other hand, Ethereum still had room to run despite short- and long-term MVRV ratios signaling caution, as key indicators like Mean Dollar Invested Age and falling Exchange Supply point to strong long-term holding.
The analyst leading Santiment’s call suggested,
“Ethereum has a good chance of breaking its all-time high and pushing toward $5,000, especially since widespread FOMO has not yet set in.”
He added,
“However, the biggest risk to the market remains the narrative around the Fed. If any news emerges to contradict the rate cut expectation, the market could see a swift correction.”
Echoing similar sentiments, David Duong, Head of Research at Coinbase, noted,
“Rate cuts could drive more liquidity into crypto as money market funds become less appealing and M2 money supply grows.”
He explained that money market funds remain near $7.4 trillion despite surging equity and crypto markets, reflecting cautious retail behavior amid tariff uncertainty.
Many investors have kept cash on the sidelines, awaiting clarity on risk-taking, but this “hated rally” could shift once Fed rate cuts arrive.
The Kobeissi Letter predicted that within a month, Powell may lower rates, citing a weaker labor market, even as PPI hits a three-year high and CPI stays above 2% for 53 consecutive months, potentially driving retail investors back into riskier assets.
In the end, while Ethereum edges toward historic highs, regulatory signals, including Vice Chair Michelle Bowman’s call for digital asset oversight, suggested data-driven decision-making will remain crucial as markets brace for Fed moves.
