On Saturday, crypto sentiment shifted back to “Greed” as the market experienced a significant surge, prompted by US Federal Reserve Chair Jerome Powell’s dovish remarks that sparked speculation about a potential rate cut in September.
The Crypto Fear & Greed Index, which gauges overall sentiment in the crypto market, climbed to a “Greed” score of 60 on Saturday, an increase of 10 points from Friday’s “Neutral” reading of 50, after briefly dipping into Fear earlier in the week.
This rebound occurred after Powell’s address at the annual Jackson Hole economic symposium on Friday, where he indicated that the current state of inflation and the labor market “may warrant adjusting” the Fed’s monetary policy approach.
ETH is the “most rate-sensitive aspect of crypto”
Following Powell’s address, Bitcoin (BTC) saw a 5% increase to $117,300, resulting in $379.88 million in liquidated shorts. In the meantime, Ether (ETH) regained its 2021 all-time highs of $4,878, peaking at $4,851, marking an 11.51% rise within 24 hours, according to CoinMarketCap.
On the same day, Axie Infinity co-founder Jeffrey “Jiho” Zirlin described Ether as the “most rate-sensitive aspect of crypto.”
“As interest rates decline, the gap between returns from depositing stablecoins in DeFi versus depositing USD in a bank widens,” he explained.
According to the CME FedWatch Tool, 75% of market observers expect a rate cut at the Fed’s meeting on Sept. 17. Trading outlet The Kobeissi Letter stated, “It seems that Fed Chair Powell is preparing for a September rate cut.”
Historically, rate cuts by the Fed often lead to increased liquidity, making riskier assets like crypto more appealing.
Crypto market observers anticipated the surge
However, St. Louis Fed President Alberto Musalem mentioned to Reuters on Friday that he requires additional time to determine whether he will support a rate cut.
“I will be reviewing my outlook and balance of risks right up until two or three days before the meeting,” he noted.
Earlier in the week, various crypto market participants predicted a spike in the market if Powell hinted at a rate cut.
Related: Bitcoin price breakout to $117K liquidates bears, paving the way for new all-time highs
Author Jason Williams commented on Wednesday that if Powell “takes a soft stance and indicates rate cuts are forthcoming, we will see a significant rally.”
Crypto Banter trader Ran Neuner asserted that “Jackson Hole will shape the future of crypto,” adding, “Trump is advocating for a rate cut for good reason, but will Powell heed that advice?”
Magazine: Everybody hates GPT-5, AI shows social media can’t be fixed: AI Eye
