Bitcoin and Ethereum Rally as Fed Chair Hints at Imminent Rate Cuts

Crypto markets rallied on Friday morning after Federal Reserve Chair Jerome Powell hinted at imminent interest rate cuts.

Bitcoin (BTC) held steady at $61,093, while Ethereum (ETH) was up 2%. Polkadot (DOT) and Solana (SOL) were relatively unchanged, each trading about 0.5% higher.

Among the top 100 cryptocurrencies, Core (CORE) is the biggest gainer in the past 24 hours, jumping 11%. Following closely, Bittensor (TAO) gained 12%, and Avalanche (AVAX) increased by 10%.

Over the past 24 hours, 29,282 traders were liquidated, resulting in total liquidations of $55 million, per CoinGlass data.

The Crypto Fear and Greed Index sits at 34, indicating that traders remain pessimistic about future prices. This index measures investor sentiment over time, where 0 signifies “Extreme Fear,” and 100 represents “Extreme Greed.”

Markets were boosted by Powell’s speech at the Fed’s annual gathering in Jackson Hole, Wyoming, where he said that interest rate reductions are on the horizon.

“The time has come for policy to adjust,” Powell said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

However, Powell did not specify the timing or magnitude of these potential cuts.

On the crypto prediction platform Polymarket, over $6 million in bets have been placed on the potential outcomes of the Federal Reserve’s decision on interest rates. Specifically, $1.92 million has been wagered on a 50+ basis point decrease, representing a 19% chance. Meanwhile, $1.22 million has been bet on a 25 basis point reduction, which has 77% odds.

The latest data from CME’s FedWatch Tool also suggests that the market is leaning towards a minimal 0.25% rate cut.

On Wednesday, minutes from the Fed’s July meeting revealed that most members favored a rate cut in September.

Bitcoin ETFs Record Positive Inflows

Spot Bitcoin exchange-traded funds (ETFs) have recorded $254 million in inflows this week, according to Farside Investors.

BlackRock’s iShares Bitcoin Trust (IBIT) led the market with $232 million in inflows, while the ARK Next Generation Internet ETF (ARKB) followed with $59.7 million. The Grayscale Bitcoin Trust (GBTC) recorded continuous outflows this week amounting to $51 million, and Bitwise Bitcoin Fund (BITB) logged outflows worth $43.7 million.

In contrast, spot Ethereum ETFs continue to bleed with a streak of $38 million in outflows this week.

U.S. Stocks Rally

Stock markets also traded higher on Friday. The Dow Jones Industrial Average climbed 0.7%, while the S&P 500 and Nasdaq Composite advanced by 0.5% and 0.9%, respectively.

Earlier in the day, Japan’s Nikkei 225 rose by 0.40% and Hong Kong’s Hang Seng was down 0.16%.

Australia’s All Ordinaries and Korea’s KOSPI index also saw gains of 0.11% and 0.46%, respectively.