Crypto sentiment shifted back to “Greed” on Saturday, buoyed by positive remarks from US Federal Reserve Chair Jerome Powell that sparked speculation about a potential rate cut in September.
The Crypto Fear & Greed Index rose to a “Greed” score of 60 on Saturday, gaining 10 points from Friday’s “Neutral” score of 50, after briefly dipping into Fear earlier in the week.
The Crypto Fear & Greed Index returned to Greed on Saturday following hints of rate cuts from Federal Reserve Chair Jerome Powell. Source: alternative.me
The uptick followed Powell’s remarks at the annual Jackson Hole economic symposium on Friday, where he stated that the current inflation and labor market circumstances “may warrant adjusting” the Fed’s monetary policy stance.
ETH is the “most rate-sensitive aspect of crypto”
Following Powell’s speech, Bitcoin (BTC) surged by 5% to $117,300, liquidating $379.88 million in shorts. Ether (ETH) also regained its previous all-time high of $4,878, reaching $4,851, marking an 11.51% increase over 24 hours, according to CoinMarketCap.
On the same day, Axie Infinity co-founder Jeffrey “Jiho” Zirlin referred to Ether as the “most rate-sensitive aspect of crypto.”
“With declining interest rates, the gap between returns on stablecoin deposits in DeFi and bank deposits widens,” he explained.
As per the CME FedWatch Tool, 75% of market participants foresee a rate cut in the upcoming Sept. 17 Fed meeting. The trading resource The Kobeissi Letter noted, “It seems Fed Chair Powell is preparing the ground for a September rate cut.”
Historically, Fed rate reductions enhance liquidity and render riskier assets, like crypto, more appealing.
Crypto market participants were anticipating the surge
Nevertheless, St. Louis Fed President Alberto Musalem told Reuters on Friday that he still requires more time to determine his stance on an interest rate cut.
“I will continually update my perspective and balance of risks up to a couple of days before the meeting,” he stated.
Earlier in the week, numerous crypto market participants expected a surge if Powell indicated a rate cut.
Related: Bitcoin price breakout to $117K liquidates bears, opening door to fresh all-time highs
Author Jason Williams commented on Wednesday that if Powell “leans towards rate cuts, we will see a significant rise.”
Crypto Banter trader Ran Neuner stated “Jackson Hole will shape the future direction of crypto,” while adding, “Trump is advocating for a rate cut with good reason, but will Powell heed the call?”
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