Financial markets, including the cryptocurrency sector, are responding positively to the Fed's latest announcement.

Federal Reserve

In recent hours, the most anticipated news in the U.S. stock market has been the statement from Federal Reserve (Fed) Chairman Jerome Powell. He has finally delivered the long-awaited announcement on interest rate changes.

During an interview at the Jackson Hole economic conference, Powell stated:

"It’s time to start cutting interest rates. The direction for adjustments is clear, but the timing and magnitude will depend on actual data, future projections, and risk evaluations."

Financial analysts estimate there is a 67.5% likelihood that the Fed will lower rates by 0.25% at the upcoming FOMC meeting on September 19, with a 32.5% chance of a 0.5% reduction.

Currently, the Fed's interest rate stands at 5.5%, the highest level in two decades, and has remained unchanged since July 2023. This rate hike was the Fed's response to uncontrollable U.S. inflation during 2020-2021, a time when the country injected massive amounts of money to support businesses and individuals amid the COVID pandemic, which disrupted the world's largest economy.

The Fed’s Interest Rate Adjustment History Over the Past Decade

The Fed’s interest rate changes over the last 10 years. Image: Trading Economics (08/24/2024)

U.S. inflation in July 2024 was at 2.9%. While it hasn’t yet reached the Fed's 2% target set when interest rates were raised, it has significantly dropped from the 9.1% peak in mid-2022, the highest level in 40 years.

On August 23, major U.S. stock indices climbed by 1-1.8%, reflecting investor optimism about the conclusion of the high-interest-rate era.

Meanwhile, Bitcoin has experienced a strong rebound, rising from $60,800 to $64,955, recovering to early August levels before its steep decline to $49,000.

1-Hour Chart of the BTC/USDT Pair on Binance

1-hour chart of the BTC/USDT pair on Binance at 08:55 AM on 08/24/2024

The top 100 altcoins have also seen clear gains following this news, with many coins increasing by 5% to 20% over the past 24 hours.

Price Fluctuations of Top 100 Cryptocurrencies by Market Cap

Price changes of the top 100 cryptocurrencies by market cap, screenshot from CryptoBubbles at 09:00 AM on 08/24/2024

Liquidations in the crypto market have exceeded $150 million over the past 12 hours, with short positions accounting for 79%.

Crypto Derivatives Market Liquidation Data

Liquidation data from the crypto derivatives market, screenshot from CoinGlass at 08:55 AM on 08/24/2024

Of particular note, one investor saw an $11.5 million short position on ETH liquidated on Binance as Ethereum's price surged by over 4.5% on the morning of August 24.