According to Powell, the tariff-driven price increases are likely to be short-lived, but persistent effects could trigger further monetary adjustments. He emphasized that labor market deterioration could undermine price stability, requiring policy changes.

For markets, this means a September rate cut looks more likely, even though Powell stopped short of a firm commitment, stressing data dependence. Before his speech, CME FedWatch priced the chance of a September cut at just 69%. Afterwards, it rose above 90%.

After his speech, the share of investors expecting a cut in the key rate jumped to 89% from 69%.
Source: CME FedWatch

Against this background, the quotes of the first cryptocurrency rose from around $112,400 to above $117,400. Over the past 24 hours, the price has added 3.5%.

Over the past 24 hours, the price has added 3.4%.
30-minute chart of BTC/USD on Binance. Source:  TradingView

Additional Context

Ahead of Powell’s appearance, hawkish forecasts dominated. The turnaround came when he struck a dovish tone, saying that the “balance of risks has shifted” and monetary policy “must be adjusted if needed.” He underlined the growing downside risks in the labor market, with both demand and supply for workers easing.

Powell also addressed the Fed’s review of its monetary framework. After five years, the central bank is moving away from the flexible average inflation targeting approach (FAIT) adopted in 2020, and returning to a more traditional stance. This shift is aimed at dealing with persistent price pressures such as tariffs and adapting to a changing economic environment. Caught between a weakening labor market and rising inflationary risks, Powell admitted the Fed faces “a difficult situation.”

“Good bounce from the range low sweep on the back of a dovish Powell. Going to remain volatile for the rest of the day,” popular trader Daan Crypto Trades wrote in a reaction on X.

Commentator TheKingfisher noted that the price had taken bid liquidity during the trip to the lows.

Bitcoin and Altcoins

Bitcoin jumped above $117,400, more than 4% higher. Ethereum surged over 13% to $4,800. Other major gainers included staking provider Lido, the meme token SPX6900, Base-based DEX Aerodrome, and stablecoin project Ethena, all posting double-digit growth.

The price of Dogecoin reached $0.23 (plus 7%), Solana rose to $193 (5.3%), and XRP to $3.03 (5%).
Source: CoinGecko

Other leading altcoins also advanced: Dogecoin hit $0.24 (+8%), Solana reached $197 (+8.4%), and XRP traded at $3.07 (+6%). Total cryptocurrency market capitalization rose by 5.36% to $4.12 trillion.

The S&P 500 index has gained almost 1.6%
The S&P 500 index has gained  almost 1.6%. TradingView

Traditional Markets

Traditional assets also moved higher. The Nasdaq gained nearly 2%, the S&P 500 added more than 1.6%, the US Dollar Index (DXY) fell by 0.8%, and gold rose over 1% to $3,372.

The price of gold reached $3,378 at one point.
XAU/USD 30-minute chart from Pyth Network. Source: TradingView  

Background

Bitcoin had already begun recovering from ~$112,000 prior to Powell’s speech. His remarks accelerated the rebound and gave momentum across risk assets. Meanwhile, a new ruling by the Finance Court of Lower Saxony has NFT traders on edge.