Bitcoin and Ethereum Drop as Fed’s Hammack Advocates for Keeping Interest Rates Unchanged

On Thursday, Bitcoin and other cryptocurrencies experienced a decline as Beth Hammack expressed opposition to interest rate cuts if she were to decide immediately.

“Based on the current data, if the meeting were tomorrow, I see no reason to reduce interest rates,” she told Yahoo Finance during the central bank’s annual event in Jackson Hole, Wyoming.

Bitcoin was trading around $112,300 on Thursday, marking a 1.6% drop in the last 24 hours, per crypto data aggregator CoinGecko. The price dipped to as low as $112,238, the lowest level since early July. 

Meanwhile, Ethereum fell 2.6% to $4,230, while Solana and XRP experienced declines of 3.5% to $180 and 3.4% to $2.87, respectively.

In a Myriad Linea market, around two-thirds of participants anticipated an interest rate change from the U.S. central bank.

While the Fed balances stable prices and full employment, Hammack stressed a strong focus on inflation, noting that the recent decline in job growth figures might give a misleading view of the labor market’s health.

After 258,000 jobs were removed from growth statistics for May and June, traders increased their expectations for a Fed rate cut in September. However, Hammack observed that the unemployment rate has remained stable at 4.2% as of July.

“Though job growth is slower, the labor market might still be balanced,” she remarked. “Labor demand may be decreasing, but so has labor supply significantly.”

Hammack stated she would need more evidence of a significant economic downturn before advocating for policies to encourage growth, asserting she sees no substantial signs of downturns at present.

Federal Reserve Vice Chair Michelle Bowman supported a rate cut in July, citing signs of economic fragility, including a slowing economy and a less dynamic labor market in her earlier speech this month.

At the Fed’s last policy meeting, many officials expressed more concern over inflation than employment. Tomorrow’s speech by Fed Chair Jerome Powell could clarify this perspective, according to Juan Leon, Senior Investment Strategist at Bitwise.

“Powell’s upcoming address is likely to be ‘cautiously hawkish,’” he noted to Decrypt, predicting an emphasis on persistent inflation and tariff uncertainties. “A firmer tone could lead to higher rates, a stronger dollar, and a negative impact on high-risk assets like crypto.”

Earlier this month, traders were nearly certain that the central bank would cut rates at the end of its September meeting. However, by Thursday that probability had decreased to 73% from 92% a week earlier, according to CME FedWatch.

In the Myriad Linea market, around two-thirds of participants anticipate a change in interest rates by the central bank. (Disclosure: Myriad is a prediction market and engagement platform created by Dastan, which is the parent company of an editorially independent Decrypt.)

With markets leaning towards easing, Leon warned that investors might be disappointed if Powell hints at a rate cut in September without fully endorsing it.

“Powell is likely to emphasize patience over pivots—reinforcing the Fed’s inflation-first strategies,” he mentioned. “That could serve as a short-term challenge for high-risk assets like crypto unless he unexpectedly leaves the door open for a September rate cut.”