Cryptocurrencies surged late Friday after Federal Reserve President Jerome Powell struck a dovish tone at the Jackson Hole economic symposium, defying market expectations for a more hawkish stance. That has prompted asset managers to call for new all-time highs for bitcoin (BTC), ether (ETH) and select altcoins.
In one of his most important speeches, Powell suggested that the labor market could benefit from lower borrowing costs, having held the benchmark interest rate steady at 4.25% for eight months.
"Downside risks to employment are rising," Powell said in prepared remarks for his keynote speech at the Jackson Hole Symposium, adding that the possibility of President Donald Trump's tariffs having only a short-lived effect on inflation is "reasonable."
"With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," he noted.
Cryptocurrencies and stocks soared, and the probability of the September Fed rate cut jumped to 90% following the speech. Most analysts expect the momentum to continue in the days ahead.
Analysts at Monarq Asset Management anticipate that ether's price will rise above $5,000 in the coming days.
"We maintain our overall bullish stance. Market internals remain constructive, with few signs of overheating and, as you point out, a clear path to new all-time highs in both BTC and ETH," Sam Gaer, chief investment officer of Monarq Asset Management's Directional Fund, told CoinDesk.
"Our house view is that Powell's dovish pivot has cleared the way for $5,000+ in the near term (also not the hardest call to make). Demand from treasury vehicles should increase into the fall as many of the deals announced this summer close or de-SPAC, in addition to ongoing institutional and retail inflows," Gaer added.
Ethereum's native token ether has already gained nearly 10% in 24 hours, hitting record highs above $4,800. As of writing, it changed hands at $4,700, according to CoinDesk data. Meanwhile, market leader bitcoin traded near $115,600, slightly down from the overnight high of $117,400.
Data from Deribit-listed options shows that ether's rally has sparked renewed demand for upside bets, or call options. At press time, risk reversals were positive across all tenors, implying relative richness of calls. The sentiment wasn't so bullish in BTC options.
Gaer stated that over-the-counter desks and market makers are experiencing stronger demand for ETH compared to BTC, suggesting that ether may outperform ahead.