Stocks linked to cryptocurrency and digital assets surged on Friday after Jerome Powell, Chair of the Federal Reserve, indicated that interest rate cuts might commence as early as September.
This statement marked a significant change following weeks filled with investor skepticism about the Fed’s actions before the year’s conclusion.
Bitcoin and ether (ETH) experienced gains following Powell’s remarks, alongside increases in the S&P 500 and Nasdaq. Stocks directly associated with the crypto sector saw some of the most pronounced movements of the day.
As of the current writing, Circle (CRCL) led with a 7% increase. Both eToro (ETOR) and Marathon Digital (MARA) saw climbs of 6%, while Coinbase (COIN) rose by 5%. MicroStrategy (MSTR), holding a substantial amount of bitcoin, gained 4%, and Robinhood (HOOD) increased by 3%.
The market movements underscored the close connection between crypto assets and equities with U.S. monetary policy expectations. Typically, lower interest rates ease financial conditions, promote risk-taking, and heighten the attractiveness of speculative assets.
U.S. President Donald Trump has consistently urged the Fed to lower borrowing costs. Powell reiterated, however, that inflation risks persist and there are tangible indications of strain in the labor market.
Nonetheless, he indicated an evolving perspective. “The balance of risks appears to be shifting,” Powell noted, mentioning that while the job market seems stable at first glance, “it manifests a curious kind of balance resulting from a pronounced slowdown in both the supply of and demand for workers.”
This cautious approach aided in reassuring investors that the Fed is potentially setting the stage for rate cuts without hastily coming to a decision. After a series of unexpectedly solid economic data, investor confidence in a September rate cut had waned. Powell’s comments effectively revived that possibility.
Read more: Powell Puts September Rate Cut in Play; Bitcoin Pushes Higher
