Could Jerome Powell's final speech at Jackson Hole ignite a super cycle for Bitcoin?

For more than a decade, the leader of the Federal Reserve of America (Fed), Jerome Powell, has become one of the most influential figures in the global economy. Each of his statements is not only a policy declaration but also a signal guiding market expectations. Now, as the Jackson Hole Economic Symposium 2025 – an event likened to the "Oscars of monetary policy" – is set to take place, the financial community sees Powell's upcoming speech as a historic moment that could reveal the interest rate trajectory and shape his ultimate legacy at the Fed.

Jackson Hole: Where "one statement" shakes the world

Jackson Hole has long become a forum where successive Fed Chairpersons send strategic messages, sometimes powerful enough to change the course of the global economy. This importance stems from the market's absolute trust in the central role of the Fed – not only as the central bank of America but also as the "helmsman" of international capital flows, where every decision has a cascading impact on securities, bonds, gold, and even cryptocurrencies.

Recent history has repeatedly demonstrated that weight: in 2021, a moderate speech by Powell helped reassure sentiment post-pandemic, triggering a flow of capital back into the financial markets and even initiating what many referred to as the "super cycle of Bitcoin"; in 2022, his unexpectedly hawkish tone caused a shock, sparking a wave of massive sell-offs in both stocks and crypto, showing that the Fed was willing to sacrifice growth to curb inflation; and by 2024, just one unclear statement immediately created mixed reactions, emphasizing that sometimes just a little ambiguity is enough to cause severe market fluctuations.

For this reason, Jackson Hole 2025 is expected to be more significant than ever, not only because this may be Powell's last appearance at this event as Fed Chairman, but also because the Fed is at an important crossroads: to continue maintaining a tightening policy to curb inflation, or to start a new cycle of interest rate cuts to support growth.

Debate at the Fed

Within the Fed, the debate over the direction of interest rates is becoming more intense than ever as opinions are sharply divided into two factions.

On one side are the hardliners, often referred to as "hawks," among whom is notably Beth Hammack – President of the Cleveland Fed – emphasizing that cutting interest rates at this time is too early as inflation is still in a "volatile" state and has not returned to the desired stable level.

This view is supported by Jeffrey Schmid of the Kansas City Fed, who warns that a hasty loosening of policy could undermine the Fed's credibility in the fight against inflation and lead to misguided market expectations.

On the contrary, the more moderate "dove" faction, represented by Michelle Bowman and Christopher Waller, argues that the Fed needs to maintain flexibility, ready to adjust policies to support economic growth in the context of gradually emerging weakening signals.

This division leaves the market in a wait-and-see stance, with data from CME FedWatch showing that investors currently price in a 71.3% chance that the Fed will cut by 0.25% in September, but at the same time also leave open the scenario that the Fed may pause to "wait for more data" if inflation and employment indicators continue to show unpredictable fluctuations.

Source: CMETherefore, the importance of Jerome Powell's speech lies not only in which side he will lean towards in the debate, but also in how he outlines the long-term framework for monetary policy, thereby influencing market expectations for many years to come.

Potential Change: Goodbye to "average inflation"?

One of the factors that analysts are particularly concerned about at Jackson Hole this year is the possibility that Jerome Powell will announce the end of the Average Inflation Targeting policy, which has been in place since 2020. This policy allows inflation to exceed 2% for a period of time to make up for the previous phase when inflation was below the target.

In theory, AIT helps the Fed have more room for flexible operation, but in practice, it has become the focus of criticism as many believe that this "too soft" approach has contributed to inflation exceeding control during the 2021–2023 period.

If the Fed officially closes AIT, the message sent will be incredibly powerful: returning to a firm commitment to maintain inflation around 2% – a benchmark considered a "anchor" for stabilizing long-term market expectations. This is not just a technical adjustment, but can also be seen as an important hallmark in Powell's legacy: closing a controversial experimental phase to bring the Fed back to its traditional trajectory.

For the cryptocurrency market, this move could have positive implications. As inflation is "tightly anchored" and the Fed gradually approaches an interest rate cut cycle, the expectation of reduced capital costs will encourage speculative capital to seek profit in riskier assets. This not only gives an advantage to technology stocks but also opens up opportunities for Bitcoin and altcoins, which typically benefit when investors' risk appetite increases.

Market: From Defense to Waiting for a Push

Right before the Jackson Hole conference, market sentiment has clearly shown a "defensive" state. In the derivatives market, the demand for risk hedging has surged, as evidenced by the options contracts on SPY and Tesla – a sign that investors are worried about unexpected volatility. In the crypto sector, Bitcoin has dropped sharply below 113,000 USD, breaking a key technical trendline after a wave of profit-taking, reflecting the cautious mindset of short-term capital.

However, in this picture full of risks, the potential for breakthroughs still exists. Analyst Remington points out that the Fed has implemented three interest rate cuts this year, while liquidity in the market is currently at a "plentiful" level – favorable conditions to initiate a new capital flow cycle. If this scenario comes true, Bitcoin has a complete opportunity to establish a higher price floor, leading to a spillover effect to the small-cap altcoin group, where profits can be outstanding for investors willing to accept risks.

However, not everyone shares an optimistic view. Nic Puckrin from Coin Bureau warns that macroeconomic factors – from conflicting inflation pressures, to signs of a weakening labor market, and escalating geopolitical tensions – are the real "headwinds" for the risk asset market, not just the crypto sector. This means that any ambiguity in the message that Powell is about to deliver could act as a catalyst for significant market volatility, as the expectations and concerns of investors continue to coexist.

Powell's Legacy: A Cautious Fed or Reform?

Jackson Hole 2025 is becoming the focus of attention not only because this could be Powell's last appearance as Fed Chair, but also because it is symbolic: a dialogue between the individual – history – and the global market.

Powell stands at a crossroads. If he chooses caution, the Fed may continue to maintain high interest rates for a longer period, prioritizing macroeconomic stability and preventing the risk of inflation resurgence. This approach will reinforce the image of a steadfast Fed Chairman, who is not reckless, but it also means accepting the suppression of growth momentum and limiting capital flows into risky assets.

On the contrary, if Powell chooses the path of reform, such as reshaping the "dual mandate" between inflation and employment, or abandoning outdated policy frameworks like the average inflation target (AIT), he will be remembered as a bold reformer – someone not afraid to rewrite the rules of the game for the next generation of the Fed. This could usher in an era of more flexible policies, reflecting the rapidly changing global economic reality.

No matter which direction it takes, the weight of the speech at Jackson Hole this time exceeds the borders of America. On Wall Street, each word will shape the sentiment of capital flows and risk appetite. In the bond market, which is seen as the "lifeblood" of global finance, signals from the Fed can immediately reprice interest rate expectations, leading to a ripple effect across all asset types. And in cryptocurrency, an asset class that is extremely sensitive to liquidity, a small change in policy direction can either initiate or end a growth cycle.

Therefore, Powell's final speech at Jackson Hole is not just a policy event, but also a crossroads of history. The financial world is holding its breath: Will he conclude his term as a cautious Fed Chair, steadfast in the legacy of stability, or as a reformer willing to leave a generational mark? The answer will not only determine the direction for the coming months but could also shape the entire decade of monetary policy ahead – and for the markets, from Wall Street to Bitcoin, just one statement from Powell is enough to create a global shockwave.

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