Federal Reserve Chair Jerome Powell's speech at the Jackson Hole economic symposium ignited a powerful rally across cryptocurrency and traditional markets. Powell indicated that current conditions in inflation and the labor market "may warrant adjusting" monetary policy, which markets interpreted as a clear signal that interest rate cuts could begin as early as September. The CME FedWatch Tool shows that 75% of market participants now expect a September cut.
The dovish remarks propelled Bitcoin above $117,000 and drove Ethereum to $4,834, just below its all-time high of $4,866 from 2021. The S&P 500 also reached record highs, demonstrating the growing correlation between traditional markets and crypto assets.
However, analytics platform Santiment issued a strong cautionary note, warning that the surge in social media mentions of "Fed," "rate," and "cut" has reached an 11-month high. "Historically, such a massive spike in discussion around a single bullish narrative can indicate that euphoria is getting too high and may signal a local top," Santiment stated. The firm noted that similar spikes have often coincided with short-term market tops throughout previous cycles.
On-chain data reveals concerning signals beneath the surface. Ethereum's short-term MVRV ratio has entered levels typically followed by corrections, while its long-term MVRV ratio sits at +58.5%, indicating many holders are in profit and may be tempted to sell. Bitcoin shows similar cautionary patterns, with exchange balances rising by nearly 70,000 BTC since June - breaking a long trend of coins moving to cold storage, which historically precedes increased selling pressure.
Amid the broader market movement, Chainlink demonstrated notable strength, rising to $27.11 (its highest since December 2024) while decoupling from market trends. Analysts suggest this independent performance could position LINK as a leader in the next market phase.
The biggest risk remains any shift in the Federal Reserve's stance. A delay or cancellation of expected cuts could quickly reverse the current bullish momentum across crypto markets.