Here is why Crypto set fire to the market yesterday

The cryptocurrency markets are soaring in a new territory Friday after the president of the Federal Reserve Jerome Powell reported that interest rate reductions could be imminent, pushing the DOW to its first 800 points plus gain this year. This has ended the longest sequence in the DOW without a new summit since December 4, 2024, according to data from the Dow Jones market, and reported a major increase in optimism to the prospect of relief from economic policy.

Cryptos were major stars of this rally.

Ethereum (ETH) has climbed more than 15% to reach a new summit of $ 4,885, exceeding its previous record from November 2021, while Solana (soil) switched between 8% and 12.5% ​​in a period of 24 hours, rushing just after the long -standing “psychological” brand of $ 200 for a $ 200 summit. Bitcoin lovers (BTC) also had their moment when he approached $ 70,000.

While cryptocurrencies and shares have skyrocketed, the probability of a drop in rate of the September Fed reached 90% after the speech, reports Reuters.

So why all enthusiasm?

In simple terms: when the market feels more security, it invests in places considered to be risky bets. Cryptocurrencies and other fintechs that are part of emerging technology are downright in these reticlations.

This time, it seems that institutional investors have carried out the charge because they are looking for investments that can balance an American dollar trembling, general volatility and risk.

“It’s almost a rescue rally,” said Carol Schleif, chief strategist of the BMO Private Wealth market, at Wall Street Journal. “The markets had anticipated more anxiety.”

Market optimism is a sign of monetary relaxation is a reversal of this anxiety, and could be a change in fortune for the sector, which whipped in recent exchanges, said Steve Lee, co-founder and director of director at Neoclassic Capital and investor in Blocktower Capital.

“I consider this to be constructive in the short term, and this can help to reverse the sale of this week. The key question is whether this momentum is exceeded on weekend of low liquidity. Since the BTC and ETH price action is increasingly motivated by the institution, the flows ETF spot today will be a strong indicator of the question of whether we are ready for another higher leg.”

What does Powell say?

As usual, Powell went directly to the point during his Wyoming speech on Friday.

“Risks down for employment is increasing,” Powell told Jackson Hole’s symposium. “And if these risks materialize, they can do it quickly in the form of highly higher layoffs and increasing unemployment.”

Powell has also said that the recent Trump administration’s policy decision could affect inflation.

“With a restrictive territory policy, reference prospects and risk balance may justify adjust our policy position,” he said, adding that prices could push inflation above, at least temporarily. “A reasonable basic case is that the effects will be short -lived, a punctual change in the price level.”

You can read Powell’s entire speech here.

So, to what height did we go?

In the case of this gathering, a rising tide has indeed raised all the boats.

The wider S&P 500 has also experienced strong gains, an increase of 1.5%, its best performance since May, and actions were a bright point on the Nasdaq composite, which increased by 1.9%.

But perhaps even more important, the index used by Wall Street to assess how frightened investors can be, the CBOE volatility index (VIX), plunged more than 14% at its lowest level this year. The VIX is a pros trading favorite and shows how turbulent the market feels.

These earnings at all levels are an encouraging sign for the guide and the Llside, experts said.

“The correlations between the cryptos and the actions are high, and we see a mood of the market which will be very sensitive to the comments of this week of the Jackson Hole meeting of the monetary authorities, as well as any reaction of the tax authorities,” wrote Manuel Villegas, analyst at Julius Baer, ​​in a research note.

What crypto continues to go up?

Although nothing is given once the opening bell sounds, some analysts already predict which companies they think will continue to do well.

Monarq Asset Management analysts told Coindesk that there was even more room for Ethereum to develop, and that they expect to see the $ 5,000 medal in short -term exchange.

“We maintain our overall upward position. The market interns remain constructive, with few signs of overheating and, as you point out, a clear path to new peaks of all time at the BTC and ETH, “said Sam Gaer, director of investments for the management fund of Monarq Asset Management, Coindesk.

“Our home point of view is that Powell’s Dovish pivot has paved the way for $ 5,000 in the short term, either the most difficult call to make,” said Gaer. “The demand of cash vehicles should increase in the fall, as many transactions announced this summer, closure or de-spac, in addition to institutional and detail in progress.”

Will Powell reduce the reduced prices?

Friday’s rally was a perfect example of how global markets are sensitive to fueling politics, especially after a long period of rate reduction. Analysts, traders and all other finance players have tried to read Powell tea leaves for years with moderate success, and even a major rally as Friday cannot completely strengthen a very fragile market.

Although no one can be entirely certain of what Powell and the Fed will do next week, market observers at all levels are optimistic in moving. “The Fed will not be the party-pooper,” said Brian Jacobsen, chief economist at Annex Wealth Management, at WSJ.

The amount of reduction in this drop can be significant in the long term.

“We still doubt that a reduction in September indicates a prolonged interest rate reduction cycle. The risks of inflation are real and come from many angles,” wrote Lauren Goodwin, economist and chief strategist for the New York Life Investments market in a note on Friday.