The crypto market is currently experiencing a remarkable rebound, as it reclaimed $4 trillion total market capitalisation. Bitcoin has surged past $117,000 after trading below $113,000 in the last 24 hours, and Ethereum has climbed past $4,700 following remarks from Federal Reserve Chair Jerome Powell.
Powell’s comments, delivered earlier today at the Jackson Hole economic symposium, hinting at a potential shift in monetary policy, have sparked speculation about interest rate cuts as early as September 2025, driving significant gains in digital assets. This has fueled optimism across risk assets, with cryptocurrencies leading the charge.
Powell expressed growing concern about labour market risks to inflation in his speech to the Federal Open Market Committee (FOMC). He emphasised that labour supply is softening alongside demand, implying that the Fed may prioritise economic growth over tightening measures.
Investors have interpreted the Chair’s comments as a strong indication of potential monetary easing, a move that typically favours speculative assets such as cryptocurrency. Lower interest rates cut borrowing costs, making high-risk, high-reward investments like Bitcoin and Ethereum more appealing to both retail and institutional investors.
This positive reaction was bolstered by recent US economic data. The Consumer Price Index (CPI) for July 2025 came in at 2.7% year on year, slightly lower than the expected 2.8%, reinforcing expectations of a dovish Fed. This lower-than-expected inflation reading has fuelled expectations for rate cuts, with markets pricing in a 25-50 basis point reduction at the Fed’s September meeting.
Bitcoin responded swiftly, rising to $117,000, while Ethereum surpassed $4,700 with 88% chance of reaching $5,000 in 2025 according to crypto prediction platform Polymarket.
Institutional interest in cryptocurrencies has contributed significantly to the rally. Allianz recently endorsed Bitcoin as a store of value, adding to its credibility. Bitcoin spot exchange-traded funds (ETFs) have seen significant inflows, with $403 million recorded on July 15, 2025, alone, according to Bloomberg.
Total Bitcoin ETF assets now stand at $149.657 billion, representing 6.46% of Bitcoin’s market capitalisation. BlackRock, a leading asset manager, added $11 billion worth of Bitcoin to its holdings, underscoring the growing institutional appetite for the asset.
This influx of funds has provided a strong foundation for Bitcoin’s price surge, with technical analysts noting that the crypto is holding critical support at $117,000. A break above $120,000 could pave the way for further gains, potentially surpassing its all-time high of $124,000 attained earlier in the month.
Ethereum is also benefiting from robust institutional demand. Spot Ethereum ETFs and staking opportunities have driven significant buying activity, with corporate treasuries accumulating over 545,000 ETH in the past month.
This influx has propelled Ethereum’s market capitalisation to $377.89 billion, surpassing traditional corporate giants in global asset rankings. The combination of ETF inflows and corporate adoption has fuelled Ethereum’s rally, with prices breaking through key resistance levels and establishing a strong uptrend.
The rally extends beyond Bitcoin and Ethereum, with altcoins also posting notable gains. XRP rose 1.42% to $2.91, Solana climbed 1.50% to $162.53, and Dogecoin jumped 2.81% to $0.1971, according to CoinMarketCap.
The Altcoin Season Index, which measures the performance of altcoins relative to Bitcoin, rose to 36 in July, up from 15 in June, signalling broader market participation. This widespread rally reflects growing investor confidence in the crypto market as a whole, driven by both macroeconomic factors and increasing mainstream adoption.
Despite the bullish sentiment, risks remain. Recent Producer Price Index (PPI) data, which came in at +0.9% month-over-month against expectations of 0.2%, raised concerns about persistent inflationary pressures. A hotter-than-expected PPI could prompt the Fed to delay or scale back rate cuts, potentially capping the current crypto rally.
Furthermore, market volatility remains an issue, with cryptocurrencies noted for their wild price swings. While Bitcoin and Ethereum are exhibiting tremendous momentum, a failure to overcome critical resistance levels could result in a drop.
The bitcoin market’s reaction to Powell’s speech demonstrates its sensitivity to macroeconomic events. As investors await further clarity on the Fed’s policy direction, the relationship between monetary policy and digital assets will remain a critical focus.