A crypto bull run has ignited, with Ethereum price surging to a record high and top altcoins like Arbitrum, Morpho, Ethena, and Ethereum Classic going up by double digits.
The ongoing crypto market rally marks a significant reversal from the previous week, when Bitcoin and most altcoins plummeted, and the fear and greed index shifted to a neutral point.
Jerome Powell Statement Sparks Crypto Bull Run
The crypto bull run was sparked by the dovish statement from Jerome Powell at the Jackson Hole Symposium. In it, he expressed concerns that the labor market was cracking and that the bank would likely cut interest rates in September. He said:
“The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance. With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
Economists and traders are now betting on a rate cut in the upcoming meeting in September. Odds of a cut jumped from 70% to 77% on Polymarket, while the CME tool places them at 80%.
Still, the Fed cut will likely be determined by the upcoming US jobs and inflation data. If the labor market continues to deteriorate, the bank will have no choice but to cut.
The challenge is that more rate cuts will likely stimulate inflation, which is already rising steadily because of tariffs.
The crypto bull run occurred after the statement, as historically, risky assets tend to perform well when the Federal Reserve cuts interest rates. They also rebounded because sentiment was significantly weak before the Jackson Hole speech.
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Crypto Liquidations Jump
The crypto market jumped as many short sellers were liquidated. CoinGlass data shows that liquidations jumped by 200% in the last 24 hours to $684 million.
Most of these liquidations, worth $362 million, were liquidated in the last 24 hours. Bitcoin shorts worth $101 million and Solana worth $32 million were liquidated.
Crypto bull run triggered liquidations
The crypto market is also rallying as investors buy the dip after most of them crashed during the week.
However, there is a risk that the ongoing crypto bull run is a dead-cat bounce (DCB). A DCB happens when an asset in a freefall rebounds briefly and then resumes the downtrend after a while.
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