All Eyes on Powell: Three Scenarios for the Fed's Speech

All attention is currently focused on the Chairman of the Federal Reserve Mỹ (Fed), Jerome Powell, as he prepares to deliver an important speech at the annual Jackson Hole economic conference this Friday. The speech, themed "Economic Outlook and Policy Framework Assessment," is scheduled to take place at 10 a.m. Eastern Time, and investors expect it to provide important signals regarding the Fed's next moves on interest rates. An Important Week for Crypto This speech is seen as the highlight of an important week for the cryptocurrency market, following a series of events that could potentially lead to significant volatility. Experts have outlined three main scenarios that Powell could pursue, each scenario bringing considerable impacts to the financial and cryptocurrency markets. Three Possible Scenarios Scenario 1: Dovish signal (loose policy) Powell may signal that a rate cut is imminent. According to the CME FedWatch tool, earlier the futures market had priced in a 79.2% probability that the Fed would cut interest rates in September. A dovish message would indicate that the Fed is concerned about the slowing labor market and is ready to act to support the economy. Scenario 2: Hawkish Warning (tightening policy) On the contrary, Powell may deliver a cautious message, emphasizing the re-emergence of inflationary pressures. The new tariffs recently imposed by President Donald Trump have raised concerns about a new wave of inflation, which could lead the Fed to maintain its monetary policy. Such a Hawkish scenario could make the market cautious, limit liquidity, and cause significant volatility. Scenario 3: Neutral, dependent on data Another possibility is that Powell maintains a neutral stance, not making any clear commitments. Economists at UBS predict that he may only emphasize the dependence on economic data, so the final decision will be made at the FOMC meeting on September 17. Impact on the Crypto Market The results from Powell's speech will have a strong impact on the cryptocurrency market: If a Dovish signal appears, lower borrowing costs will ease financial conditions, thereby boosting the flow of money into risk assets like Bitcoin and Ethereum. If Hawkish dominates, restricted liquidity may create a new wave of volatility in the crypto market. In fact, the Fed's policies have significantly influenced the cryptocurrency market. In 2024, during the Jackson Hole speech, Powell confirmed the readiness to cut interest rates, setting the stage for a strong rally in both the stock market and crypto. Conclusion Powell's speech this week is not only important for traditional financial markets but also has a significant impact on cryptocurrencies. Investors should closely monitor the signals given to predict the direction of interest rates, liquidity, and investment opportunities in risky markets such as crypto. Jackson Hole 2025 promises to be a pivotal milestone for both Wall Street and cryptocurrency investors.