Solomon: A 25 Basis Point Cut Is More Realistic

In an interview with CNBC, Solomon stated: “I don’t think a 50 basis point cut is on the table.”

Market data aligns with his cautious stance. According to the CME FedWatch Tool, only 7.8% of traders anticipate a half-point cut at the September 17 meeting. Instead, a dominant 92.2% expect a smaller 25 bps reduction. Solomon himself emphasized that this measured step is the more probable outcome.

Signs of a Softening Labor Market

Beyond rate speculation, Solomon highlighted emerging weakness in the U.S. labor market:
“There’s no question that we’re seeing some softening in employment trends,” he said.

He added that depending on how economic conditions unfold, one or even two more rate cuts could still occur before the end of the year.

Implications for the Crypto Market

Lower interest rates tend to reduce the appeal of safer assets like bonds, often pushing investors toward higher-risk, higher-reward markets such as cryptocurrencies.

Crypto trader Mister Crypto suggested on X that a 50 bps cut would trigger explosive growth: “If that happens, crypto will smash through previous all-time highs.”

However, blockchain analytics firm Santiment issued a cautionary note. The surge in social media hype around a September cut, the platform warned, may indicate investor euphoria is overheating—often a signal of a potential local top.

Shifting Bank Forecasts

Standard Chartered recently revised its outlook, pointing to August’s weaker-than-expected jobs data as justification for seeing a 50 bps cut within the realm of possibility.

Meanwhile, Bank of America, which previously ruled out any cuts in 2025, has reversed course. The bank now projects two separate 25 bps reductions—one in September and another in December.

These adjustments followed Fed Chair Jerome Powell’s remarks at the Jackson Hole Economic Symposium on August 22, where he hinted at a possible rate cut in the near term.

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This statement is interpreted as a significant signal that the government may move beyond support provided through tax obligations and aim for returns through investments.

Powell Opens the Door to a Rate Cut!

Federal Reserve Chairman Jerome Powell delivered new assessments of the economy at the Jackson Hole meeting of economists. Highlighting the risks in a weakening labor market, he suggested that a rate cut could be considered; however, he also pointed out that inflation still has the potential to rise.

You may also be interested in this article: BNB Treasury’s Big Move: Targeting a $1 Billion Fund!

Following these developments, markets around the world experienced volatility:

• Barclays and BNP Paribas began forecasting that the Fed will implement a 25 basis point rate cut in September 2025. They also noted that two separate cuts could take place within the year.
• Stock markets reflected a positive mood. The S&P 500, Dow Jones, and Nasdaq indices rose; bond yields declined. Small-cap stocks particularly stood out.
• Market probability rose to 87–90%, meaning the September rate cut has become largely “priced in.”

In his speech, Powell strongly emphasized that the Fed’s decisions would be entirely data-driven and that it would maintain its independence.

Kevin Hassett’s statement that the government may take stakes in companies signals a new era in economic policy that is centralized and investment-oriented. Meanwhile, Jerome Powell appears ready to take steps toward flexibility in interest rates while remaining committed to the Fed’s independence and data-driven decision-making.

When these two developments are evaluated together, it becomes clear that a new search for balance between public policy and monetary policy is underway. Upcoming economic data in the coming weeks will reveal this balance more clearly.

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Ethereum ETFs See Strong Inflows

On the Ethereum side, ETHV, CETH, QETH, ETHE (+45.90m), ETH (+22.70m), ETHA (+109.40m), ETHW (+36.60m), FETH (+117.90m) and EZET (+5.50m) recorded a total inflow of +337.70 million dollars. This clearly indicates that institutional and retail interest in Ethereum ETFs remains strong.

Boosted by this momentum, Ethereum price reached a historic milestone last night, hitting a new ATH (all-time high) of $4,880. This record highlights investors’ growing confidence in ETH and the direct impact of ETF inflows on the market.

Click here to follow Bitcoin and Ethereum ETFs and other On-Chain data in real time.

Bitcoin ETFs Show a Mixed Picture

The situation looks different for Bitcoin. No inflows were observed for BTCO, BTC, BTCW and BRRR, while GBTC (+6.40m), FBTC (+50.90m), ARKB (+65.70m), BITB (+12.70m), HODL (+26.40m) and EZBC (+13.50m) added up to a total of -23.20 million dollars.

Despite this imbalance, Bitcoin price surged to around $177,000, supported by the overall positive market sentiment. Still, the ETF data shows that investors remain more cautious on the BTC side.

Macro Impact: Powell’s Remarks

During yesterday’s Jackson Hole meeting, Fed Chair Jerome Powell delivered relatively positive remarks that played a major role in fueling the rally. His references to potential “controlled easing steps” boosted demand for risk assets, further supporting momentum in both Ethereum and Bitcoin.

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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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Rising Market Tensions

On Wednesday, data showed that Bitcoin briefly dipped to $112,565, marking its lowest point since August 3.

Ryan Lee, chief analyst at Bitget, said the decline reflects “rising nerves in the market.” According to Lee, the macroeconomic uncertainty surrounding Powell’s speech has triggered “fear spikes” among crypto traders. However, he noted that if the $112,000 support holds, it may not signal a reset but rather set the stage for the next leg of the bull run.

Inflation and Rate Cut Expectations

On August 12, the U.S. Consumer Price Index (CPI) showed a 2.7% year-over-year increase. While unchanged from June, the figure remains above the Fed’s 2% target.

Following this, expectations for a September rate cut decreased. According to CME Group’s FedWatch tool, the probability dropped to 82%, down from 94% a week earlier.

André Dragosch, Head of European Research at Bitwise, emphasized that potential Fed cuts in 2025 could be a major catalyst for the markets. He argued that lower rates would boost U.S. money supply and strongly support Bitcoin’s rally at least until the end of the year.

Corporations Keep Accumulating Bitcoin

Despite weaker sentiment among retail traders, institutional players continue to accumulate Bitcoin.

The number of entities holding Bitcoin has surged from 124 in early June to 297. This includes 169 public companies, 57 private firms, 44 investment funds, and 12 governments. Together, they now hold 3.67 million BTC — representing more than 17% of the total supply.

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What is the Jackson Hole Meeting?

The Jackson Hole meeting is a highly anticipated event in the global financial world, where central bankers, leading economists, and policymakers come together. Key topics such as monetary policy, global economic balance, and market expectations are discussed during the conference.

In particular, signals regarding interest rate decisions and liquidity policies make the meeting highly significant for investors. That’s why Jackson Hole is considered a guide not only for the U.S. but also for global markets.

Powell’s Speech This Year

Powell’s speech is scheduled for Friday, August 22, around at 10 a.m. Eastern Time. Investors are especially focused on whether Powell will give a clear signal about an upcoming rate cut ahead of the Fed’s September policy meeting.

This year’s speech carries extra weight for Powell personally, as his term ends next year—meaning this could be one of his last major appearances at Jackson Hole. Markets are eager to see how he will balance signs of a weakening labor market with persistent inflation pressures.

Weakness in the Labor Market

Recent data show signs of a slowdown in the U.S. labor market. Non-farm payrolls came in well below expectations, and previous months’ numbers were revised downward. The unemployment rate rose to 4.2%, while weekly jobless claims climbed to their highest level since 2021.

This situation raises concerns regarding the Fed’s “full employment” mandate. As a result, markets are closely watching whether Powell will highlight this weakness and signal a stronger possibility of a rate cut.

Inflation Risks Still Persist

On the other hand, the inflation picture remains challenging. The Producer Price Index (PPI) reached a three-year high, and while CPI came in line with expectations, core inflation continues to trend upward. This makes Powell’s job more complicated, as it limits the Fed’s room to cut rates aggressively.

Possible Scenarios

Analysts point out three potential scenarios for Powell’s Jackson Hole remarks:

1. Signal a rate cut: He may cite labor market weakness as justification, boosting expectations for a September cut.

2. Stress inflation risks: Powell could dampen market expectations by emphasizing, “We are not yet aligned with our inflation target.”

3. Stay data-dependent: He may refrain from strong guidance, instead highlighting that upcoming labor and inflation data will shape the Fed’s decisions.

Rate Cut Expectations

Market expectations have already become clear. According to CME Group FedWatch Tool, 83.1% of investors expect the Fed to deliver a 25 basis point cut at its next meeting. The probability of keeping rates unchanged stands at 16.9%, while a more aggressive 50 basis point cut is currently priced at 0%.

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Tuesday, August 19

1inch ($1INCH) will make an important announcement. 

Wednesday, August 20

Eurozone Annual Inflation (CPI) will be released – 12:00 

Forecast: 2.0% | Previous: 2.0% 

Fed FOMC Meeting Minutes will be published – 21:00 

Thursday, August 21

The Jackson Hole Economic Policy Symposium, one of the most critical global economic events, will begin. 

Central bank governors and economists from around the world will discuss global economy and monetary policies for three days. Statements from Jackson Hole may lead crypto investors to reassess their positions. 

At 15:30, U.S. Initial Jobless Claims will be released. 

Forecast: 227K | Previous: 224K 

Friday, August 22

Fed Chair Jerome Powell will deliver a speech at 17:00. 

Markets and crypto investors will closely monitor Powell’s remarks. 

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The BTC/USD pair rose by 2.43% in the last 24 hours, reaching $109,500, with trading volume increasing by 20% to $56 billion. The main driver behind this rise is Bitcoin’s synchronized movement with the global M2 money supply. The M2 money supply has reached an all-time high of $55.48 trillion. 

Additionally, Coinglass data supports the upward trend. A 7.28% increase in open interest on BTC futures indicates a generally bullish market. 

Peter Brandt’s Bold Bitcoin Prediction: $140K Target in Sight 

The analyst emphasized Bitcoin is in a strong breakout pattern in a chart shared on the X platform. Brandt questioned, “Isn’t this bearish flag too obvious to fail?” According to Brandt, after this breakout, BTC is aiming first for $104,000, then $140,000. This outlook aligns with forecasts from major institutions like Standard Chartered and is supported by the Global M2 curve that Bitcoin has followed consistently since early 2024. 

Is this bear flag (yellow box) so obvious to everyone so as to not work?
Or is this chart about to drop off a cliff?
Just asking. CTB$ pic.twitter.com/x3c9ABwVx5

— Peter Brandt (@PeterLBrandt) July 3, 2025

Arthur Hayes: Bitcoin to $90K Before Jackson Hole 

However, Maelstrom Fund CIO Arthur Hayes is more cautious. He believes June’s CPI data and July’s FOMC decision may tighten market liquidity. The restructuring of the Treasury General Account (TGA) could significantly withdraw liquidity from the market. 

Hayes stated, “The market will move sideways or slightly down until Powell’s Jackson Hole speech.” He highlighted a potential drop to the $90,000–$95,000 range for BTC. Preparing for this scenario, Maelstrom Fund sold illiquid altcoin positions and reduced Bitcoin exposure. 

FOMC and CPI Data to Decide Bitcoin’s Fate 

Ultimately, Bitcoin’s direction will largely depend on economic data and central bank decisions. If inflation falls below expectations, real yields remain low, attracting capital to non-yielding assets like Bitcoin. Furthermore, if the Fed softens its hawkish stance and slows balance sheet reduction, it could trigger a new bull run. 

CPI data and the Fed’s tone will determine the strength of this move. The battle between bulls and bears will become clearer in the coming days. 

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Analysts are closely watching today’s Jackson Hole meeting, anticipating clues about the Federal Reserve’s monetary policy direction, which could have repercussions for the prices of risk assets like Bitcoin.

QCP Capital noted, “The downward revision of U.S. non-farm payrolls suggests a weakening labor market, raising concerns that the Fed might delay interest rate cuts, which triggered a wave of selling. However, these fears were somewhat alleviated by the July FOMC minutes, which indicated that some policymakers were open to rate reductions, hinting at a more dovish approach balancing inflation and employment targets.”

QCP added, “All eyes are now on Fed Chair Powell’s speech at Jackson Hole. While markets are focused on potential rate cuts, unexpected economic data could have a significant impact. We favor products that capture the upper band of earnings.”

There is an expectation that Powell might signal a move to lower borrowing costs in the coming month. Historically, such actions have been received positively by traders since easier access to capital typically fosters growth in riskier sectors.

Potential for Disappointment

However, some are adopting a more cautious stance.

Augustine Fan, a manager at SOFA, commented, “Risk markets might be setting themselves up for disappointment if Powell seeks to leave some room for maneuver against the four cumulative cuts priced in by the end of the year. Nonetheless, Jackson Hole has traditionally been a ‘risk-positive’ event, so expect traders to be more inclined to buy on dips.”

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The Fed might choose slow rate cuts, lowering rates by a quarter point at each of its forthcoming meetings and modifying the pace based on early next year’s state of the economy, he added. Should the economy fall more drastically, the Fed might then take further significant half-point cuts to get rates near 3% by spring 2024.

Challenges in Implementing Larger Rate Reductions

Timirao noted that one of the main difficulties is that the Fed usually has a high threshold for applying a larger rate reduction. Such a choice would demand either a large drop in economic data, as in 2001, or major stress in credit markets, as shown in 2007. The Fed adopted a more cautious approach in past instances, such as 1995, 1998, and 2019, cutting tiny quarter-points.

That puts the Fed in what Timirao termed a “Catch-22” scenario. Officials must have compelling proof that the present rules are unduly restrictive if they are to speed rate reductions. But by the time such data shows up, a recession could be too late to prevent.

Market Anticipation Ahead of Powell’s Speech

Powell’s speech will be keenly examined for hints regarding whether the Fed is thinking about changing its strategy, thereby balancing the necessity to lower inflation with the possibility of increasing unemployment. Powell’s remarks might indicate how the Fed intends to negotiate “the mountainside descent” of increased interest rates while attempting to preserve economic stability as market players await direction.

With inflation and the cost of living taking front stage, the Fed’s benchmark lending rate, which ranges from 5.25 to 5.50 percent, currently marks a 23-year high and is lowering demand in the biggest economy in the world ahead of November’s presidential elections.

“He will likely signal that a rate cut is coming soon,” said Deutsche Bank’s top US economist, Matthew Luzzetti. “However, I think he will not indicate the probable size of that rate cut.”

Luzzetti of Deutsche Bank said that Powell is unlikely to come out forcefully in favor of any move on Friday, and the decision to cut by 25 or 50 basis points would depend on how the data comes in over the next month and, most significantly, what the next employment report looks like. A weaker job data would also probably increase the likelihood of a bigger half-point fall, he said.

Following the Jackson Hole conference, on September 6, the next job data will be released before the Fed’s next meeting in mid-September.

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