Jerome Powell delivered the most anticipated speech of the year at the Jackson Hole symposium on August 23, declaring that "the time has come to adjust monetary policy." Bitcoin jumped from $55,000 to $62,000 in 48 hours, before stabilising at $58,900.
The Jackson Hole signal
The Jackson Hole symposium is the annual conference of global central banks. The Fed chair's speech is closely watched for signals on future monetary policy. Powell's phrasing — "the time has come" — is the explicit confirmation of a rate cut at the September FOMC meeting.
Macro data justifies easing
The July jobs report showed 114,000 jobs created — well below the 175,000 expected. The unemployment rate rose to 4.3%. This data suggests the labour market is slowing faster than anticipated, justifying preventive monetary easing.
ETF flows resume
Farside Investors recorded $750 million in net inflows in the week following the Jackson Hole speech — the best week since June. Institutional investors are anticipating the positive impact of rate cuts on risk assets.
What this data does not tell us
A rate cut signal is positive for Bitcoin, but the size of the cut (25 or 50 bps) and the pace of subsequent cuts will be decisive for the duration of the positive impact.