XRP, Ethereum spike as investors bet on dovish Powell and September interest rate cut

Major cryptocurrencies skyrocketed on Friday after Federal Reserve chair Jerome Powell hinted that the organisation might be closer to interest cuts than previously thought.

“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said during his annual address at Jackson Hole, Wyoming.

Current conditions, said Powell, allow “us to proceed carefully as we consider changes to our policy stance.”

What are those conditions?

Elevated inflation risks, said Powell, while unemployment numbers remain low. The Federal Reserve has a mandate to keep full employment and stable prices.

Ethereum is leading the way, up 9% on the day. Ether trades at about $4,645.

Ripple-linked XRP spiked nearly 5%, changing hands for $3.03. Bitcoin is up 3.4% to about $116,611.

Jackson Hole

Powell’s speech was the talk of the town this week.

That’s because Jackson Hole, the Fed’s annual gathering in Wyoming, carries outsized weight for high-risk assets, like cryptocurrencies, since they’re largely conditioned to what the Fed’s monetary policy is.

Looser financial conditions are favoured by crypto investors since they allow for more liquidity to flow within financial markets.

When conditions are tight, it’s harder for money to go in and out of the system, leading investors to restrict themselves to more conservative instruments.

Across assets

The colour green didn’t just drape cryptocurrencies, however.

The bellwether S&P 500 is up 1.5%, the tech-heavy Nasdaq gained 1.9%, and gold also rose about 1%.

Before Powell’s speech, there was an 83% chance of an interest rate cut in September, according to the CME Group’s FedWatch tool. After his remarks, the odds jumped to around 90%,

Powell also stressed the importance of the Fed’s independence, a feature of the US central bank that has come under fire since President Donald Trump took office for his second term.

Pedro Solimano is DL News’ Buenos Aires-based markets correspondent. Got at a tip? Email him atpsolimano@dlnews.com.