The hawkish stance at the Jackson Hole Conference put additional pressure on the crypto market. Federal Reserve Chairman Kevin Warsh reiterated that the 2% inflation target is not to be shaken, and stated that the U.S. economy is performing better than expected, with no clear signs of tightening in the credit and lending markets. As a result, markets increased their bets on a rate hike in September, causing Bitcoin, Ethereum, and XRP to decline accordingly.
The expectation of an interest rate hike in September has clearly intensified.
In his speech, Walsh stated that maintaining price stability is a clear responsibility of the Federal Reserve, and there is no room for maneuver. He also noted that although wage growth is modest, it is not a reliable indicator for predicting future inflation, and overall medium-term inflation expectations remain stable.
After the meeting, interest rate markets quickly adjusted their expectations. Data shows that the probability of keeping interest rates unchanged in September dropped from 71% to 50%, while the probability of a 25-basis-point interest rate hike rose from 30% to 49%. In contrast, the expectation of a rate cut was almost completely ruled out, with a probability of only 1%.
Mainstream crypto assets see a simultaneous decline
After the risk appetite cooled down, major crypto assets generally declined:
- Bitcoin reports $77,901.87, down 3.1% in 24 hours
- Ethereum reports $2,444.00, down 3.1% in 24 hours
- XRP is priced at $1.39, down 5.0% in 24 hours.
In addition, Solana reported $104.81, a decrease of 1.9% in 24 hours, but still rose by 15.2% in the past 7 days. Overall, the total market value of the crypto market has dropped to $2.74 trillion, with a daily decline of 2.2%.
Bitcoin is also facing additional selling pressure. Reports mention that there are large sell orders accumulated around $81,000, and the price failed to hold above $81,500 after reaching that level, subsequently falling back.
The market is now looking forward to the FOMC meeting in September.
Despite the short-term pressure, not all traders believe that the downward trend will continue. Market participants Micha ël van de Poppe suggest that the recent downward liquidity may have been largely released, and after the clearing process is completed, the previous low has also been touched. He believes that Bitcoin may not continue to fall significantly from its current position. What is more worth paying attention to in the future is whether some altcoins will show relative strength if Bitcoin enters a sideways range.
Currently, market attention is shifting towards the FOMC meeting in September. Against the backdrop of interest rate hike probabilities returning to near-even levels and expectations of interest rate cuts almost disappearing, crypto assets are being re-priced in line with a tighter monetary policy path. Whether this decline marks the beginning of a deeper round of adjustment or merely a short-term liquidity clearance remains to be seen, depending on how the market absorbs subsequent policy signals.
