On Saturday, the Crypto Fear & Greed Index, a measure of overall market sentiment, climbed to a “Greed” score of 60. This was a notable rise from Friday’s “Neutral” score of 50, after dipping into “Fear” earlier in the week.

Powell’s Dovish Comments Fuel Bitcoin Surge

At the annual Jackson Hole economic symposium on Friday, Powell’s speech indicated that the prevailing inflation and labor market conditions “may warrant adjusting” the Fed’s monetary policy. This sparked a Bitcoin surge, with BTC jumping 5% to $117,300, leading to $379.88 million in shorts being liquidated.

Simultaneously, Ether (ETH) approached its 2021 all-time highs, climbing to $4,851—a striking 11.51% increase over 24 hours, as reported by CoinMarketCap. Ether’s price action underscores its sensitivity to rate changes. In an X post, Axie Infinity co-founder Jeffrey “Jiho” Zirlin emphasized Ether as the “most rate-sensitive aspect of crypto.”

Market Expectations of a Rate Cut

According to the CME FedWatch Tool, a majority—75%—of market participants anticipate a rate cut at the upcoming September 17 Fed meeting. Trading resource The Kobeissi Letter noted, “It appears Fed Chair Powell is setting the stage for a September rate cut.”

Historically, Fed rate cuts have been known to boost liquidity, making riskier assets like cryptocurrencies more appealing to investors. However, St. Louis Fed President Alberto Musalem expressed caution, stating that more time is needed to decide on backing a rate cut.

Crypto Market’s Reaction to Powell’s Speech

Earlier this week, many in the crypto market predicted a surge if Powell indicated a rate cut. Author Jason Williams remarked that if Powell “comes in soft and leans that rate cuts are likely, we turbo rip.” Similarly, Crypto Banter trader Ran Neuner commented, “Jackson Hole will shape crypto’s direction moving forward,” pointing out the impact of Powell’s decisions.

Overall, the shift in crypto sentiment to “Greed” reflects growing optimism among investors, fueled by the potential for monetary easing. This optimism is mirrored in the significant price movements of major cryptocurrencies like Bitcoin and Ether.

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