Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin’s price dipped below $113,000 on Wednesday, reaching a two-week low not seen since August 3, as investors globally braced for critical remarks from US Federal Reserve Chair Jerome Powell at the annual Jackson Hole gathering on Friday. The cryptocurrency market is keenly awaiting Powell’s speech, which is expected to provide significant signals regarding the Federal Reserve’s stance on interest rate policy ahead of the September Federal Open Market Committee meeting.
Market Nerves and Economic Indicators
The recent fall in Bitcoin’s value, briefly touching $112,565 according to Cointelegraph data, reflects what analysts describe as “rising nerves in the market.” Ryan Lee, chief analyst at Bitget exchange, noted that macroeconomic tensions surrounding Powell’s impending speech are causing “fear spikes” among digital asset traders. Lee suggested that if the $112,000 support level holds until the speech, it could set the stage for the next phase of the bull run rather than a market reset.
Investor concerns regarding potential delays in interest rate cuts intensified after the US Consumer Price Index (CPI) report on August 12. The CPI showed consumer prices rising 2.7% year-over-year, remaining unchanged from June but still significantly above the Fed’s target of 2%. This persistent inflation data has fueled speculation that the Federal Reserve might maintain higher interest rates for longer than previously anticipated.
Following the CPI news, expectations for an interest rate cut in 2025 significantly declined. According to the latest estimates from the CME Group’s FedWatch tool, the probability of an interest rate cut fell to just over 82% on Wednesday, a notable decrease from over 94% recorded just a week prior.
Analyst Outlook on Rate Cuts
Despite the immediate market jitters, some analysts maintain a bullish long-term outlook tied to future monetary policy shifts. André Dragosch, head of European research at crypto asset manager Bitwise, suggested that the first interest rate cut of 2025 could act as a significant market catalyst. He anticipates this could trigger expectations of two or three total interest rate reductions before the end of the year.
Dragosch explained to Cointelegraph that further rate cuts by the Fed would lead to a steepening of the yield curve, implying an acceleration in US money supply growth. He believes that these rate cuts could be the most significant macroeconomic development to support the continuation of Bitcoin’s rally, potentially lasting until the end of the year.
Corporate Accumulation Continues Amid Volatility
While retail investor sentiment has seen a significant shift amid the current macroeconomic uncertainty, corporate entities continue to accumulate leading cryptocurrencies. Data from BitcoinTreasuries.NET indicates a sustained trend of institutional adoption. At least 297 public entities now hold Bitcoin, a substantial increase from 124 at the beginning of June.
These holdings include 169 public firms, 57 private firms, 44 investment and exchange-traded funds, and 12 governments. Collectively, these entities have acquired approximately 3.67 million BTC, which represents over 17% of Bitcoin’s total circulating supply, underscoring a long-term conviction in the digital asset despite short-term price fluctuations.
As the market awaits Jerome Powell’s Jackson Hole address, Bitcoin’s immediate price action remains highly sensitive to macroeconomic signals, particularly those concerning interest rate policy. However, underlying corporate accumulation trends suggest a persistent institutional belief in the asset’s long-term value, even as retail sentiment experiences volatility.
