BTC price is struggling to stay above $60,500, and closing at higher levels after weeks is positive. Altcoins have started to show the expected activity, albeit sporadically. For example, AVAX continues with a 10% increase today, showing the impact of yesterday’s good news. So why is today important?
Cryptocurrencies and Jackson Hole
Powell will start his speech shortly, and his statements are important after the biggest downward revision in employment data since 2009. We will share the Jackson Hole speech in Wyoming instantly here, where the Fed Chairman is expected to take a clear stance regarding the September meeting. Fed members’ stance on cuts is clear, and a 25bp cut is just weeks away.
Cryptocurrency markets have a strong potential for increased volatility during the speech. If Powell gives stronger rate cut messages, it could trigger a rapid recovery in cryptocurrencies. However, if we see a more neutral statement, markets expecting a 100bp cut annually might price it with a decline.
Will Cryptocurrencies Rise?
Bitget Research’s chief analyst Ryan Lee says the market will gain more confidence in a rate cut from this speech. Powell, who has been saying more frequently that they will make decisions by examining data from meeting to meeting, might not appear confident in the 2% inflation path, and skeptical statements would not be good.
“As of now, the market expects a 25 basis point cut with a 73.5% probability or a 50 basis point cut with a 26.5% probability in September. The 10-year Treasury yield is around 3.85%, and the US Dollar Index is at 101.44.”
Bitfinex Derivatives Head Jag Kooner pointed to the employment revision.
“Despite the downward revision, broader economic indicators like GDP and unemployment claims show that the economy is not in as dire a situation as during the 2009 recession. These mixed data may cause Powell to maintain a cautious tone and emphasize the Fed’s data-dependent stance.”
Finally, Anndy Lian is extremely positive about the results of future rate cuts after four years.
“I believe there will be an increase in liquidity. This is because low interest rates encourage borrowing and spending, putting more money into circulation. Some of this liquidity tends to flow into riskier assets like crypto in search of potentially higher returns.”
