Bitcoin News Today: Bitcoin's Price Dance with the Fed’s Next Move

Federal Reserve Chair Jerome Powell's recent remarks at the Jackson Hole Economic Symposium have sparked widespread speculation about potential interest rate cuts, which have had an immediate and measurable impact on the cryptocurrency market. In his speech, Powell indicated a shift in the Fed’s stance, stating that the labor market's “curious balance” and rising downside risks may warrant policy adjustments. As a result, the probability of a 25-basis-point rate cut in September has risen significantly, with prediction market data showing bettors assigning an 80% likelihood to such an event, up from 56% before the speech [1].

Bitcoin (BTC) responded swiftly to these expectations, surging to approximately $116,500, a rebound from earlier lows below $112,000. The price movement reflects the cryptocurrency’s sensitivity to macroeconomic conditions and investor sentiment around risk assets. Alongside Bitcoin’s price action, stocks of companies tied to the crypto sector also experienced notable gains, with Marathon Digital (MSTR) and Coinbase (COIN) rising by over 5% and nearly 7%, respectively [2]. Altcoins like Ethereum (ETH) and Solana (SOL) also saw positive momentum. This market reaction underscores the growing correlation between traditional financial indicators and digital asset performance.

The anticipated rate cut has broader implications for inflation dynamics and monetary policy. Powell emphasized the need for a careful approach, noting that while inflation remains a concern, the labor market's fragility suggests a need for flexibility. The Fed has maintained a neutral policy stance throughout 2025, but recent data, including a slowdown in hiring and an uptick in producer prices, has prompted a reevaluation. Powell's remarks suggested a willingness to act if risks materialize, a sentiment echoed by some Fed officials like Christopher Waller, who advocate for cuts to cushion a potential economic slowdown [3].

The implications for Bitcoin are multifaceted. In a scenario where the Fed cuts rates, Bitcoin could benefit as an inflation hedge, particularly if the dollar weakens further and yields rise. Analysts have speculated that a dovish policy could drive risk-on behavior, boosting Bitcoin’s price and reinforcing its role as a non-sovereign store of value. Conversely, a more cautious approach by the Fed might lead to a slower but steady appreciation in Bitcoin as macroeconomic instability persists and investor demand for alternatives to fiat assets increases [4].

The interplay between Fed policy and Bitcoin's price is further complicated by geopolitical and economic factors. The Trump administration’s push for aggressive fiscal policies and trade measures could exacerbate inflationary pressures regardless of the Fed’s actions. Tariffs and fiscal expansion are already contributing to upward price momentum, with core PCE inflation remaining above the Fed’s 2% target. These developments suggest that the U.S. economy may face inflationary challenges even if the Fed resists immediate rate cuts [5].

Overall, the cryptocurrency market is closely watching the Fed’s next move, with Bitcoin positioned to react based on the trajectory of interest rates and inflation. The Jackson Hole event has reinforced the notion that central bank policy continues to play a pivotal role in shaping investor behavior. As the September FOMC meeting approaches, market participants are likely to remain sensitive to any additional signals from the Fed on its policy path.

Source:

[1] Bitcoin and Crypto Stocks Surge as Powell's Rate-Cut Hint Revives Risk Appetite (https://www.investopedia.com/bitcoin-and-crypto-stocks-surge-as-powell-rate-cut-hint-revives-risk-appetite-11795898)

[2] Bitcoin Gets A Price Boost From Fed Chair Jerome Powell (https://cointelegraph.com/news/bitcoin-hits-dollar116k-after-fed-s-powell-floats-rate-cut)

[3] Powell says Fed may need to cut rates, will proceed carefully (https://www.reuters.com/markets/wealth/powell-says-fed-may-need-cut-rates-will-proceed-carefully-2025-08-22/)

[4] All roads lead to inflation: Fed cut or not, Bitcoin may stand ... (https://cointelegraph.com/news/all-roads-lead-to-inflation-fed-cut-or-not-bitcoin-may-stand-to-gain)

[5] BTC climbed to 1.7% of global money before Fed chair ... (https://cointelegraph.com/news/btc-1-7-global-money-fed-chair-signals-rate-cut)