Bitcoin's price has dropped to a disappointing $113,000, a fall from the high of $124,200 earlier this month. Ethereum isn't faring much better, crashing down to $4,200, while the entire crypto market’s capitalization shrank to $3.8 trillion.
And it’s not just the cryptos; the stock market’s also feeling the heat. The Nasdaq 100, S&P 500, and Dow Jones are all down by over 0.50%.
Jerome Powell's Big Moment at Jackson Hole
Now, why are we all holding our breath? It’s because Jerome Powell, the big man at the Fed, will give a speech at the Jackson Hole Symposium on Friday morning. This annual event brings together the financial big wigs to talk shop about the global economy. Powell’s speech is like the Super Bowl for market watchers since he’ll give some much-needed insight into the Fed’s next moves.
Powell’s speech is extra special this time, given the warning signs of stagflation creeping into the U.S. economy, all thanks to Trump’s tariffs. Recent data from the Bureau of Labor Statistics showed that the job market is slowing down, with unemployment up at 4.2% and just 73,000 jobs created in July.
As for inflation, it’s holding steady. The core Consumer Price Index (CPI) ticked up to 3.1%, and the Producer Price Index (PPI) rose to 3.6%. So, things are...meh.
Rate Cut Speculation
There’s chatter that Powell may surprise us with a rate cut. Polymarket odds say there’s a 70% chance, while the CME FedWatch tool puts it at a whopping 85%. Expect Powell to signal a move towards cutting rates in September, though he’ll still make it clear that monetary policy will stay tight, even with a 25-basis point cut.
But here’s the thing: while Powell’s speech is important, the real market shake-up will come on September 5 (Nonfarm Payrolls) and September 11 (CPI data).
Crypto Market Reactions
As always, the crypto market is hanging on Powell’s every word. If he leans toward a rate cut, crypto could see a nice bounce back. The same goes for stocks, as low interest rates tend to send investors running toward riskier assets, like crypto. Remember what happened during the pandemic when the Fed slashed rates to zero and started printing money? Crypto and stocks skyrocketed.
Even if Powell sounds hawkish, expect the market to rebound. After all, crypto prices are already down, so investors are bound to jump in once the speech ends and buy the dip.
Kristian Koch
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