Bitcoin experienced a strong surge after Jerome Powell signaled at Jackson Hole that the Federal Reserve may be preparing to pivot toward easier policy. The ongoing bull market began after BlackRock filed its spot Bitcoin ETF application in June 2023 and persisted despite inflationary pressures, rate hikes, and a tighter monetary stance. Powell acknowledged cooling inflation, slowing growth, and strains from restrictive policy, prompting markets to price a potential shift. Traders reacted quickly, driving Bitcoin markedly higher and raising the prospect that a Fed move toward accommodation could amplify the current bull trend.
For much of this cycle, bitcoin's rise has come against a headwind of monetary tightening. The story of this bull run began when BlackRock filed its spot Bitcoin ETF application in June 2023, which marked the institutional green light for Bitcoin adoption. Since then, despite persistent inflation concerns, rate hikes and constant talk of "higher for longer," Bitcoin has continued to march higher, shaking off the macro drag.
Today could mark a turning point. Powell's speech hinted at what markets have been waiting for: the Fed preparing to pivot. After nearly two years of restrictive policy aimed at cooling inflation, the Fed Chair acknowledged that conditions have shifted. Inflation has cooled from its peak, economic growth is slowing, and the burden of tighter monetary policy is showing cracks in the system (see recent employment numbers).
The market reaction was immediate. Bitcoin ripped higher (~$117,000 as of this writing), as traders recognized what this means: the "monetary headwinds" narrative could be giving way to the tailwinds of easier liquidity. Risk assets thrive when central banks blink, and bitcoin, the hardest money in existence, tends to be the fastest horse when the Fed caves to its own new reality.
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