Powell's dovish stance pushes ETH to a new all-time high, is the altcoin frenzy about to begin?

2025-08-24 15:08:30

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Once ETH stabilizes above its all-time high, altcoins may experience a full breakout.

Written by: 1912212.eth, Foresight News

On the evening of August 22, Federal Reserve Chairman Powell's speech finally injected a dose of confidence into the precarious crypto market. At the Jackson Hole annual meeting, Powell stated that a shift in risk balance may require policy adjustments, indicating that the risks to employment are on the rise. The market interprets that Powell seems to be preparing for an interest rate cut in September.

Affected by this positive news, BTC quickly reclaimed the $112,000 mark, rising 2.95% in one hour, and at one point climbed above $117,000. ETH performed even better, surging from around $4,200 and finally reaching a historic high of $4,887.59 around 5 AM on August 23. The ETH/BTC exchange rate rose to 0.0418, setting a new high since October 2024. Many altcoins benefited from the market surge and experienced a strong rebound.

In terms of contract data, Coinglass shows that over the past 24 hours, the total liquidations across the network exceeded $694 million, with short positions liquidated over $468 million.

Powell's Softening Stance, Market Expects Two Rate Cuts This Year

Before Powell's speech, the market had a pessimistic expectation that it might turn hawkish, leading some traders to choose to stand aside, resulting in a significant decline in the crypto market before the conference.

Unexpectedly, Powell's significant speech indicated that the current situation means rising downside risks for employment. This shift in risk balance may imply the need for interest rate cuts.

Powell mentioned that stable labor market indicators like the unemployment rate allow the Federal Reserve to cautiously consider adjusting its monetary policy stance, opening the door for a rate cut in September.

According to CME's "FedWatch" data, after Powell's speech, the probability of a rate cut in September increased to 91.2%.

Nick Timiraos, a renowned journalist for The Wall Street Journal and known as the "voice of the Federal Reserve," reported that Fed Chairman Powell opened the door for a rate cut as early as next month's meeting, stating that the employment market may face a more severe slowdown, which could alleviate concerns about inflation driven by rising costs from tariffs. However, Powell's remarks emphasized concerns about inflation, easing the market's expectations for a series of aggressive rate cuts by the Federal Reserve. Inflation has been above the Fed's 2% target for over four years.

Deutsche Bank expects the Federal Reserve to cut rates by 25 basis points in both September and December, whereas previously, the bank predicted that the Fed would only cut rates in December 2025.

Kathy Bostjancic, Chief Economist at Nationwide, stated that the Federal Reserve will cumulatively cut rates by 75 basis points by the end of the year. She noted, "Powell has taken a noticeably more dovish tone and has significantly opened the door for a rate cut in September, believing that the downside risks to employment are rising significantly. This supports our judgment of a 25 basis point cut next month, and we continue to expect the Fed to cumulatively cut rates by 75 basis points by the end of the year, as the labor market will further weaken, while inflation rises only moderately and temporarily."

According to The Kobeissi Letter's analysis of Fed Chairman Powell's speech today: "Today's speech indicates that their (the Fed's) top priority has shifted to supporting the labor market. The change in risk balance may require policy adjustments, specifically referring to the labor market. Therefore, employment reports will determine future rate cuts."

The Federal Reserve's next interest rate decision will be announced at 2 AM Beijing time on September 18.

Optimistic Performance of Ethereum Spot ETF and Stablecoin Data

As one of the important indicators for monitoring market capital flows, the data for Bitcoin spot ETFs is not optimistic, showing significant net outflows in recent days, reflecting strong market risk aversion.

However, the Ethereum spot ETF turned back to a net inflow of $287.61 million on August 21 after four consecutive days of net outflows. The total net inflow currently stands at $12.09 billion. It is evident that the market may be betting on Ethereum for higher returns.

Stablecoin data continues to show inflows.

According to defiLlama data, the total market capitalization of stablecoins is currently $277.74 billion, with a total increase of 0.96% over the past seven days, amounting to $2.645 billion. Among them, USDT has a monthly increase of 2.6%, USDC has a monthly increase of 4.63%, and USDe has a monthly increase of 80.87%.

Additionally, the popular project WLFI token will start trading and its first claim on September 1 at 20:00, with 20% of the shares available for early supporters to claim simultaneously, and it will be listed on DeFi DEX and major CEX. As a DeFi project supported by the Trump family, WLFI carries a political halo, and the launch of its token trading may attract significant attention from politically inclined investors interested in cryptocurrencies, especially domestic users in the U.S., which could help boost the market in the short term and inject liquidity.

Market Views

Raoul Pal, a former Goldman Sachs executive and founder of the macro research firm Real Vision, released a technical analysis suggesting that Total3 (altcoins excluding BTC and ETH) is about to reach a turning point.

Data analysis firm Altcoin Vector stated that as ETH provides upward momentum and a ripple effect for other tokens, once ETH stabilizes above its historical high, altcoins may experience a comprehensive breakout.

Weiss crypto analyst Juan stated that altcoins will only go crazy after ETH breaks $5,000, and the peak of this round of increases may occur between September 13 and 20, with the latter being more likely. Before that, the overall market is expected to trend upward.

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