Powell Signals Potential September Rate Cut, Sending Bitcoin and Markets Higher

August 22, 2026 — Federal Reserve Chair Jerome Powell surprised markets Friday by adopting a dovish tone during his speech at the Kansas City Fed’s Economic Symposium in Jackson Hole, opening the door to a possible interest rate cut in September.

Powell highlighted growing downside risks to the labor market, stating, “Downside risks to employment are rising. If those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

Following his remarks, Bitcoin rallied about 2% to $114,200. U.S. stocks gained more than 1%, the 10-year Treasury yield dropped six basis points to 4.27%, the dollar index slipped 0.5%, and gold prices rose 0.6%.

A Volatile Lead-Up to Powell’s Speech

Prior to Powell’s address, risk assets including cryptocurrencies faced pressure amid expectations of a continued hawkish Fed stance. Bitcoin peaked at a record $124,000 just a week ago, supported by nearly 100% odds of a September rate cut. But those expectations waned, with probabilities dropping to 69%, dragging Bitcoin down nearly 10% to around $112,000.

In the wake of Powell’s comments, market confidence revived, pushing rate cut odds back near 90%, according to CME FedWatch, and Bitcoin has since rebounded.

Ether (ETH) experienced a sharper decline, falling roughly 12% from its near-record highs before climbing nearly 8% post-speech.

Meanwhile, the Nasdaq Composite fell 3% over the days before Powell’s speech as traders priced in reduced chances of easing, only to rally after his dovish remarks.