Market Analysis and Historical Parallels

Cowen evaluates Bitcoin’s decline through the lens of the four-year cycle theory and macroeconomic factors. Historically, Bitcoin tends to peak in the fourth quarter following halving events. Previous cycles in 2013, 2017, 2021, and the current 2025 cycle confirm this trend. However, Cowen highlights that this cycle is also influenced by macro conditions similar to 2019.

According to Cowen, the return-on-investment (ROI) curve from the bottom mirrors prior cycles. The 2016–2017 cycle lasted roughly 1,067 days, 2020–2021 about 1,059 days, and the current cycle around 1,062 days, showing Bitcoin’s cyclicality and historical price behavior remain relevant.

Critical Signal: 50-Week Moving Average

Cowen notes that Bitcoin’s inability to stay above its 50-week moving average (~$103,000) for several weeks would signal a key market pattern. Historically, similar behavior marked the 2021 peak.

Is Bitcoin Entering a Bear Market? CryptoQuant Insights

Retail Investor Apathy

Cowen highlights that the lack of an altcoin season underscores reduced retail participation. Social interest and investor behavior mirror the 2019 scenario, suggesting patience is crucial.

He also recalls that BTC peaked near the end of monetary tightening in 2019, followed by a weak period. Today, high interest rates continue to pressure risk assets, and even if rates start falling, Bitcoin may not experience an immediate rebound.

Long-Term Opportunities

By analyzing past cycles, Cowen points out that patient investors often profit in bear markets. For example, early investors in the 2017 and 2021 cycles gained significant long-term returns despite missing short-term peaks. Similarly, investors who remain patient toward 2026 may find opportunities in Bitcoin.

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Jerome Powell’s comments suggested a more cautious stance on monetary easing. The speech also reinforced concerns about inflation risks and the slowing labor market, creating renewed volatility in digital assets.

Fed Signals a Pause as Neutral Rate Comes Into View

Powell emphasized that this year’s rate reductions have brought policy into a “range of plausible estimates of neutral.” This phrasing indicated that the Fed sees less urgency for further cuts. He said any additional moves would depend on incoming data, the evolving economic outlook, and the balance of risks. The message aligned with a growing market view that an aggressive cutting cycle is unlikely.

The Fed chair also stated that labor market conditions are cooling while inflation remains somewhat elevated. He noted that downside risks to employment have increased, yet inflation risks continue to show an upward tilt. Powell reiterated that few inflation readings have been released since the October meeting, but the overall picture has not shifted significantly, justifying the recent twenty-five basis-point cut.

Additionally, Powell confirmed that purchases of short-term Treasury securities will support effective control of the policy rate. This operational detail highlights the Fed’s effort to manage volatility in funding markets during a sensitive policy phase.

January Rate-Cut Odds Collapse During Powell’s Speech

CME FedWatch data showed a sharp drop in expectations for another rate cut at the January meeting. Markets now assign only a twenty-four percent chance of a twenty-five-basis-point cut, while the probability of rates remaining unchanged has surged to seventy-six percent. This shift reflects the Fed’s more data-dependent posture heading into 2026.

The Federal Reserve will have two critical inflation reports to evaluate before the meeting. The Producer Price Index arrives on January fourteenth, and the Consumer Price Index will be released one day earlier. Both will heavily influence rate-path projections.

Despite the Fed projecting just one rate cut for 2026, Bloomberg chief economist Anna Wong sees room for a total of one hundred basis points in reductions next year. She expects weaker payroll growth and limited evidence of an inflation rebound. Powell’s term expires in May, and former President Trump is expected to appoint a chair who supports faster easing.

Key rate expectations include:

• Seventy-six percent probability of unchanged rates in January

• Twenty-four percent chance of a twenty-five-point cut

• Fed median outlook shows a single cut for 2026

• Some analysts still expect as much as one hundred basis points of easing

Bitcoin Rallies on Speech, Then Reverses as Fed Uncertainty Rises

Bitcoin spiked to ninety-four thousand dollars during Powell’s remarks, reflecting early optimism about future easing. However, the move quickly reversed, and the price slid to ninety-two thousand. This pattern mirrors the sharp swings seen after several FOMC events throughout the year.

The correction underscores how sensitive crypto markets remain to U.S. monetary policy. Traders are reassessing risk appetite as the Fed signals a pause, and macro expectations continue to dictate short-term momentum. With rate-cut uncertainty rising, digital assets may face additional volatility in the first quarter of next year.

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Miran explained that the growth of stablecoins might influence the Fed’s neutral interest rate. A decrease in the neutral rate could prompt the central bank to lower its policy rates in response. According to CoinGecko, the current total market capitalization of all stablecoins is $310.7 million. Miran added that Fed research indicates this figure could grow to $3 trillion within the next five years.

Impact of Stablecoin Demand on the Economy

According to Miran, stablecoins may increase demand for U.S. Treasury bonds and other liquid dollar assets from investors outside the United States. “I expect stablecoin demand to continue rising, which could have a trillion-dollar effect on monetary policy,” he said.

International organizations, including the International Monetary Fund (IMF), have warned that stablecoins could pose risks to traditional financial instruments and services. U.S. banking groups have also expressed concerns, stating that stablecoins may attract potential banking customers and urging Congress to strengthen regulations.

GENIUS Act and Regulatory Framework

Miran highlighted that the GENIUS Act provides clear guidelines for stablecoin regulation and ensures consumer protection. The law requires stablecoin issuers to hold reserves backed by safe and liquid U.S. dollars at a one-to-one ratio.

“Although I usually approach new regulations with caution, the GENIUS Act gives me significant confidence. This framework provides legitimacy and accountability compatible with traditional dollar holdings,” he said.

Importance of Stablecoins for Investors and the Market

Stablecoins provide liquidity and security for investors while indirectly affecting interest rate policies. Miran emphasized that the growth of stablecoins may increase global investor demand for dollar assets, creating important economic implications.

Bullet List: Stablecoin Effects on the Fed and Market

• Can lower the neutral interest rate, influencing Fed policy rates

• Increases demand for U.S. Treasury bonds and dollar assets

• May create competition for traditional banking and financial services

• Provides legitimacy and accountability through regulatory compliance

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According to Powell, data prior to the U.S. government shutdown suggested that economic growth was stronger than expected, with the economy returning to September levels. However, tariffs continue to increase price pressures, complicating the fight against inflation.

“The Fed must move carefully. Acting too quickly could leave the inflation battle unfinished,” Powell warned. He added that ending balance sheet expansion earlier would have made little difference, noting that balance sheet management remains a key tool of monetary policy.

Fed Nearing End of Balance Sheet Reduction

Powell indicated that the Federal Reserve could end its balance sheet reduction process in the coming months. This development comes amid signs of mild tightening in money markets. “We’re not far from our target, but there’s still some way to go,” he said, stressing that reserves remain abundant.

The Fed Chair also cautioned that a further decline in job openings could push unemployment higher. Research shows that the effects of monetary policy on employment and inflation take longer to materialize, making sudden policy shifts risky.

Powell warned that the slow pass-through of tariffs could pose a risk of persistent inflation, while declining to comment on gold or Bitcoin prices. “Inflation is driven by fundamental supply and demand factors,” he said, reaffirming the Fed’s data-dependent policy approach.

Powell’s remarks suggest that the Fed will remain data-driven and cautious in the months ahead. Markets are closely watching new signals regarding interest rates, balance sheet policy, and the inflation outlook.

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On September 17, 2025, the Fed lowered its policy rate to the 4.00–4.25% range. Fed Chair Jerome Powell highlighted risks to inflation and employment, stressing the central bank’s commitment to independence. 

Following the rate cut, the Dow Jones gained 0.6% to 46,018.32 points. The S&P 500 fell 0.1% to 6,600.35 points, while the Nasdaq rose slightly by 0.3% 

Powell’s Remarks: Inflation and the Economy 

Powell stated, “We remain committed to achieving our goals for the benefit of the American people.” He noted that economic growth is showing moderate momentum, but labor market risks are rising while inflation remains elevated. 

He added that inflation has eased from its 2022 highs but tariff effects still need monitoring. On policy direction, Powell emphasized: 

“The Fed will continue to act independently. We are strongly committed to that.” 

“There was little support among members for a 50 bps cut.” 

Powell stressed the Fed can act quickly if necessary, but sees no immediate need for aggressive rate moves. According to Fed projections, inflation expectations align with the 2% target next year, and tariff-related price pressures should be temporary. The labor market slowdown and weaker demand suggest a cautious pace ahead. 

2025 Fed Rate Decision Calendar 

• September 2025: Rate cut to 4.00–4.25% 
• October 29, 2025: Next decision 
• December 10, 2025: Final decision of the year 

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25 Basis Point Rate Cut Expected 

Market pricing shows near certainty that the Fed will cut its policy rate by 25 basis points this week. Traders also expect three more cuts by year-end and at least three additional reductions in 2026. The latest CPI data came in line with forecasts, rising 0.4% month-over-month and 2.9% annually. Core CPI stood at 3.1% year-over-year. 

Despite this, most economists believe a larger-scale cut is unlikely in the short term. Powell’s press conference following the decision will play a critical role in shaping expectations for the rest of the year. 

Trump–Powell Tensions 

President Trump criticized Powell as “inadequate” and called for an “immediate and significant cut.” He argued that while energy and food prices are easing, the housing market is being left behind due to high rates. Reports in U.S. media also claim Treasury Secretary Scott Bessent has been exploring potential successors to Powell. 

Trump’s remarks have heightened political pressure on the Fed, reigniting debates about its independence and raising new questions over the credibility of the U.S. dollar. 

The Lisa Cook Case and New Evidence 

The Trump administration has sought to remove Fed Governor Lisa Cook over alleged “deceptive and potentially criminal” mortgage disclosures. Cook countered that the removal order exceeded presidential authority and violated her due process rights. On September 9, a federal court granted an injunction preventing her removal. 

The administration has appealed the decision. However, newly published documents by NBC may weaken the government’s case. A May 2021 loan summary showed Cook’s Atlanta property listed as a vacation home—supporting her claim that it was declared as a second residence. The evidence could undermine allegations of misrepresentation in her mortgage filings. 

Candidates for Powell’s Successor 

Powell’s term expires in May 2026, and speculation about his successor is already heating up. Reported frontrunners include Kevin Hassett, Kevin Warsh, and Kevin Waller, while BlackRock executive Rick Rieder is also emerging as a strong candidate. 

These developments place Fed independence and market credibility under intense scrutiny. Ahead of the decision, both political pressures and legal battles remain in sharp focus for global investors. 

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Trump said China, India, and Brazil are challenging the U.S. with their tariffs. He also noted that the stock market’s recent decline is due to uncertainty. Moreover, he highlighted the urgent need for a decision on tariffs. If the appeal is rejected, he would have to roll back tariffs. 

Tariff Appeal and Economic Impact 

Trump mentioned an “emergency meeting” scheduled for tomorrow regarding the tariff decision. He stressed that the country cannot face serious issues without tariffs. The president warned that losing the appeal would be economically catastrophic. He added that the stock market needs tariffs and that they are essential. 

Trump also stated that a significant interest rate cut is necessary. This move, he said, could stabilize the economy. He concluded that a negative ruling from the appeal court would place a heavy financial burden on the nation. 

International Relations and President’s Remarks 

Trump expressed disappointment regarding Russia’s President Putin. On the other hand, he is not worried about relations with China or Russia. “They would never use their military against us,” he said. Additionally, he denied all rumors about his health circulating in the media. 

Overall, Trump’s statements highlight critical economic and trade concerns. The upcoming emergency meeting and tariff decisions will have major implications for investors and the broader U.S. economy. 

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What Powell Said About Labor Market and Risk Balance

Powell noted that labor supply has weakened in line with demand, while employment growth has sharply slowed near balance levels. He added that shifts in the risk balance may require policy adjustments. According to Powell, downside risks in the labor market are rising, and the overall economic balance is being closely monitored.

Inflation and Tariffs

Recent data shows that 12-month PCE inflation increased by 2.6% in July, with core inflation rising 2.9%. Powell emphasized the slowdown in consumer spending and the impact of tariffs on prices. A reasonable scenario assumes that tariff-related inflation effects will be temporary. However, while persistent inflation pressure is possible, labor market risks likely limit it.

Powell stressed that a one-time rise in price levels cannot be allowed to become a sustained inflation problem.

Is Powell Preparing for a Rate Cut

Following Powell’s remarks, the market is now pricing a 91.3% probability of a Fed rate cut in September, up from 75% prior to the speech. Investors continue to fully price in the possibility of two rate cuts by the end of the year.

Impact on Crypto Markets: Bitcoin and Ethereum Rising!

Before Powell’s speech, Bitcoin traded around $112,500, but during the speech it surged to $115,600. Ethereum also climbed to $4,600. This movement highlights how the Fed’s policy stance and dovish signals can influence crypto assets.

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What the FOMC Minutes Reveal?

On August 20, the Federal Open Market Committee (FOMC) released its July meeting notes, highlighting concerns about new tariffs potentially fueling U.S. inflation. Policymakers debated whether tariffs would cause a short-term price shock or a longer-lasting inflationary cycle, but no consensus was reached.

Most governors agreed to keep rates steady in the 4.25%–4.5% range, prioritizing price stability even though unemployment saw a slight decline.

The Biggest Disagreement in Decades

Bowman and Waller’s stance to cut rates created notable friction within the central bank. Bowman argued that if temporary tariff effects are excluded, inflation is already near target — while the labor market is clearly slowing. She added that high rates were dragging down economic growth in 2025 and risked fueling unemployment.

Pressure on Jerome Powell

Trump’s attacks on Fed Chair Jerome Powell have been ongoing. On social media, he repeatedly insulted Powell and even floated the idea of removing him from office. However, as the Fed is an independent institution, firing Powell would require Supreme Court involvement. His current term ends in May 2026.

Who Could Replace Powell?

As Powell’s term nears its end, speculation over his successor is heating up. Former St. Louis Fed President James Bullard confirmed discussions with Treasury Secretary Scott Bessent, noting that rates should be cut by 100 basis points in 2026. While aligned with Trump’s stance, Bullard stressed the importance of maintaining the Fed’s independence.

Another strong candidate is Christopher Waller, who already voted for a rate cut and is praised for his accurate inflation forecasts. Other names include National Economic Council head Kevin Hassett, former Fed governor Kevin Warsh, and economist Marc Sumerlin — all critics of the Fed’s high-rate policy.

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Prediction markets like Kalshi indicate declining bets on a 25-basis-point rate cut while wagers on unchanged rates are increasing. Currently, 68% of investors expect a 25-basis-point cut in September, though this share is decreasing. Conversely, 34% predict no change in Fed rates. This trend adds uncertainty to the markets. 

CME FedWatch shows a 79% chance for a 25-basis-point cut in September. Down from 99%, investors now expect two rate cuts this year instead of three. This shift encourages more cautious market behavior and delays investment decisions. 

Investors Await PCE Data While Bitcoin Holds Support 

Crypto investors closely monitor the Fed’s preferred inflation gauge, PCE data. In June, U.S. PCE inflation rose 2.6% year-over-year, exceeding May’s upwardly revised 2.4% estimate. These figures will be crucial for the Fed’s September decisions, with results scheduled for August 29. 

Bitcoin finds support near $112,000, and analysts suggest buying on dips. Michael van de Poppe notes that BTC follows classical price movements. He recommends accumulating if prices fall below $110,000. Rekt Capital recalls Bitcoin fell 29% in 2017 and 25% in 2021. Over the last 24 hours, BTC dropped 0.31% to $112,892. Trading volume fell 10%, signaling reduced investor interest. 

This uncertainty and volatility affect global markets and encourage cautious investor behavior. All eyes remain on the August 29 PCE release. Fed Chair Powell’s Jackson Hole speech and rising U.S. 10-year Treasury yields, alongside the DXY dollar index hitting 98.34, continue to influence market dynamics. 

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