Omar Marques | Lightrocket | Getty Images
The worth of ether smashed through its 2021 record on Friday after Federal Reserve Chair Jerome Powell hinted at upcoming rate cuts and investors returned to risk-on mode.
The second-largest cryptocurrency surged 15% late Friday, rising as high as $4,885.00 and surpassing its November 2021 record of $4,866.01.
Bitcoin rose 4% to $117,008.29.
Ether (ETH) bounces after Powell’s Jackson Hole speech
The moves got here during Powell’s annual address from Jackson Hole, Wyoming. “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” said Powell.
“Traders appear to have been caught completely off-sides by Powell’s dovish comments today,” said Jordi Alexander, CEO at crypto trading firm Selini Capital. “The market positioning in recent sessions has seen clear risk-off moves in assets like crypto and tech, and today’s organising of a September rate cut is causing a panicked repositioning, which could proceed through the illiquid weekend as shorts get squeezed.”
“Momentum is back on the menu with the administration and the Fed seemingly aligned on easing,” he added.
Across the time of the speech, ETH saw about $120 million briefly liquidations in a one-hour period, in line with CoinGlass. When traders use leverage to short ether and the coin’s price rises, they buy ETH back from the market to shut their positions. In turn, this pushes the coin’s price even higher and leads to more positions being liquidated.
Shares of corporations focused on accumulating ether, which were a number of the hardest hit this week when investors rotated out of tech names, bounced with the coin Friday. Bitmine Immersion and SharpLink Gaming jumped 12% and 15%, respectively. Bitmine fell greater than 7% on the week, its first down week in three.
Shares of Peter Thiel-backed ETHzilla tumbled greater than 31% at one point Friday after the ether treasury company offered as much as 74.8 million of its shares for resale. It ended the session off 31.4% following Powell’s Jackson Hole remarks.
Elsewhere, Solana-focused treasury firm DeFi Development surged 21%, and crypto exchange Coinbase and bitcoin proxy Strategy advanced 6% each.
Prior to now two months, ether has emerged as a pacesetter within the crypto market. That shift was catalyzed by regulatory tailwinds that prompted a boom in institutional interest around stablecoins, which account for 40% of all blockchain fees and greater than half of that are powered by the Ethereum blockchain.
Ether is “the most important macro trade over the following 10 to fifteen years and a number of it has to do with the incontrovertible fact that stablecoins have grow to be the Chat GPT moment for crypto,” Fundstrat’s Tom Lee recently told CNBC’s “Worldwide Exchange.” “And now we’ve got the GENIUS Act and Project Crypto from the SEC, which is basically Wall Street running onto the blockchain.”
—CNBC’s Nick Wells contributed reporting
