Ether Rebounds Near-Record Highs After Jerome Powell’s Dovish Comments Spark Market Rally
Ether experienced a significant surge on Friday, reaching almost record highs, following hints from Federal Reserve Chair Jerome Powell regarding potential interest rate cuts and the resurgence of risk-taking among investors.
As of reporting, ether was trading 12% higher at $4,738.91, according to Coin Metrics. Last week, the second-largest cryptocurrency nearly touched its 2021 peak of $4,866.01 before dipping as low as $4,000 on Tuesday.
Bitcoin also saw an increase of 3%, trading at $116,191.09.
The market fluctuations occurred during Powell’s annual address from Jackson Hole, Wyoming. “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” said Powell.
Jordi Alexander, CEO at Selini Capital, commented, “Traders appear to have been caught off guard by Powell’s dovish remarks today. The market positioning in recent sessions has displayed clear risk-off moves in assets like crypto and tech. Today’s announcement of a potential September rate cut is causing a frantic repositioning, which could continue through the weekend as short positions are squeezed.”
“Momentum appears to be back on the table with the administration and the Fed seemingly aligned on easing,” added Alexander.
During Powell’s speech, ether witnessed approximately $120 million in short liquidations within an hour, according to CoinGlass. When traders use leverage to short ether and the coin’s price rises, they buy ETH back from the market to close their positions. This action pushes the coin’s price even higher, leading to more positions being liquidated.
Following the speech, stocks of companies specializing in ether accumulation rebounded. Bitmine Immersion and SharpLink Gaming rose 14% and 12%, respectively.
Shares of ETHzilla tumbled over 38% at one point on Friday after the ether treasury company announced plans to offer up to 74.8 million of its shares for resale. The stock was down 30% following Powell’s Jackson Hole remarks.
Elsewhere, DeFi Development, a Solana-focused treasury firm, surged 19%, and Coinbase advanced 6%. Stablecoin issuer Circle gained 7%, and bitcoin proxy Strategy added 5%.
Ether-based exchange-traded funds experienced $287.6 million in inflows on Thursday, ending a four-day streak of outflows. However, these funds are still on track for their first week of net outflows ($578.9 million) since May 9 and the biggest week of outflows on record.
Bitcoin ETFs experienced five consecutive days of outflows as of Thursday, with total weekly outflows amounting to $1.15 billion. They are now on track for their biggest week of net outflows since February 28.