ETH Eyes $5K, Bitcoin Rally Continues After Powell's Comments

Cryptocurrencies experienced a surge late Friday after Federal Reserve President Jerome Powell adopted a dovish tone at the Jackson Hole economic symposium, a move that defied market expectations. Asset managers are now forecasting new all-time highs for Bitcoin (BTC), Ether (ETH), and select altcoins.

Powell's Dovish Stance: Key Takeaways

Powell indicated that the labor market could benefit from lower borrowing costs, maintaining the benchmark interest rate at 4.25% for eight months.

• “Downside risks to employment are rising,” Powell stated, suggesting potential limited impact of tariffs on inflation.
• He added that a shift in policy stance may be warranted given the restrictive territory.

Cryptocurrencies and stocks rallied, with the probability of a September Fed rate cut jumping to 90% following the speech. Analysts largely anticipate continued momentum.

BTC and ETH: New Highs in Sight

Analysts at Monarq Asset Management foresee Ether's price surpassing $5,000 soon.

• Sam Gaer, CIO of Monarq Asset Management’s Directional Fund, noted that market internals remain constructive, pointing to new all-time highs for BTC and ETH.
• Gaer believes Powell’s dovish pivot paves the way for ETH to reach $5,000+ in the near term, driven by increasing demand from treasury vehicles and ongoing institutional and retail inflows.

Ether has already gained nearly 10% in 24 hours, hitting highs above $4,800. Bitcoin traded near $115,600, slightly down from its overnight high of $117,400. Data from Deribit-listed options reveals renewed demand for ETH upside bets, indicating stronger demand for ETH compared to BTC. Gaer added that Bitcoin's pullback from its all-time high was only around 9.6%, suggesting robust demand. Spencer Yang, Managing Partner at BlockSpaceForce, anticipates further rate cuts after September, sustaining the market momentum into year-end. Yang highlighted BTC, ETH, BNB, SOL, and LINK as key assets expected to perform well.

ETF Flows in Focus

Steve Lee, Co-founder of Neoclassic Capital, views Powell's stance as a short-term positive for cryptocurrencies, emphasizing the significance of continuous inflows into Bitcoin and Ether spot ETFs.

• Lee considers ETF flows today and Monday as strong indicators for another leg higher.
• He mentioned Base, Monad, Story, and SUI as projects of interest.

Gaer highlighted Solana and the SOL ecosystem as favored, citing JITO and JUP.

Potential Risks: DAT Deals and Market Volatility

While Powell’s dovish stance encourages a rally, traders should be wary of corporate treasury cryptocurrency adoption and potential equity market volatility.

• Lee cautioned about declining quality in Digital Asset Treasury (DAT) deals, signaling potential risks.
• Gaer urged monitoring risks from an overheated equity market and potential macro or geopolitical shocks.

Nasdaq-listed Strategy started corporate BTC adoption in 2020, with over 100 publicly-listed firms accumulating 984,971 BTC since then. The risks associated with this trend are not negligible.