Bitcoin trades near 117K and Ethereum hits 4834 as Powell hints at cuts while Santiment warns rising rates may weaken crypto.
The Federal Reserve’s approach to interest rates is drawing attention from both traditional markets and the cryptocurrency sector. Analysts warn that shifting expectations around monetary policy could drive volatility across digital assets. On-chain research firm Santiment has suggested that a prolonged rise in interest rates could weaken momentum in the crypto market.
Powell’s Jackson Hole Speech and Market Reaction
During the annual Jackson Hole meeting, Federal Reserve Chair Jerome Powell suggested that “the shifting balance of risks may warrant policy adjustments.” The comments were widely interpreted as dovish, with markets pricing in the possibility of a rate cut in September. However, Santiment cautioned that higher rates, if sustained, may reduce liquidity available to speculative assets like Bitcoin and Ethereum.
Following Powell’s remarks, Ethereum moved closer to its all-time high of $4,866, reaching $4,834. Bitcoin continued to consolidate near $117,000 while Chainlink reached $27.11, its highest level since late 2024. Yet, Santiment data shows that exchange balances for Bitcoin are rising, with nearly 70,000 BTC added to exchanges since June. Historically, such a trend has been associated with future selling pressure.
Social Data and Sentiment Trends
Social media discussions around “Fed,” “rate,” and “cut” surged to their highest level in 11 months after Powell’s speech. Santiment research suggests that when a single bullish narrative dominates social discussions, the market may be approaching a short-term top. Social sentiment also recorded its lowest levels since July just before the recent rally, which the firm noted often signals a potential rebound.
At the same time, Ethereum’s on-chain activity is showing mixed signs. Its short-term MVRV ratio has entered a “danger zone” near +15 percent, a level that often precedes pullbacks. The long-term MVRV stands at +58.5 percent, raising the risk of profit-taking by long-term holders. However, other indicators, including the decline in Ethereum’s supply on exchanges, suggest continued preference for holding.
Traditional Markets and Crypto Correlation
Traditional equities have also moved higher following Powell’s remarks. The S&P 500 reached a new all-time high, strengthening the correlation between stocks and digital assets. Charts shared during the analysis showed that Bitcoin, the S&P 500, and gold have been moving in the same direction in response to Fed policy discussions.
Will Fed rate cuts lead to a crypto market breakout?
Rate cuts could drive more liquidity into crypto as money market funds become less appealing and M2 money supply grows.@Dav1dDuong joins @MilkRoadDaily to discuss potential crypto-market catalysts and more. pic.twitter.com/8Gzb1no3yT
— Coinbase Institutional 🛡️ (@CoinbaseInsto) August 20, 2025
Coinbase Institutional added to the debate on X, asking if Fed rate cuts would lead to a crypto market breakout, noting that lower rates could push liquidity back into digital assets as money market funds become less attractive and M2 money supply grows, while Santiment stressed that rate hikes or prolonged restrictive policy may lead to the opposite effect by reducing demand for crypto.
