Bitcoin Price Skyrockets to $116K as Fed Hints at Pivotal Rate Cut

The cryptocurrency market witnessed an exhilarating surge as Bitcoin price dramatically climbed to $116,000. This remarkable rally followed pivotal comments from Federal Reserve Chair Jerome Powell, signaling a potential shift in monetary policy. Consequently, investors and traders are now closely watching the implications of a possible interest rate cut on risk assets, especially digital currencies like Bitcoin.

Bitcoin Price Explodes on Dovish Fed Clues

Bitcoin (BTC) experienced a significant rebound, recovering from recent six-week lows. The price action intensified after Fed Chair Jerome Powell delivered a highly anticipated policy speech. Specifically, he spoke at the annual Jackson Hole economic symposium, an event often used to foreshadow upcoming policy adjustments. Powell’s remarks provided strong “dovish” clues regarding the future trajectory of Fed interest rates, sparking immediate market optimism.

During his address, Powell indicated that the current state of inflation and the labor market “may warrant adjusting” the Fed’s monetary policy stance. Therefore, markets reacted swiftly and positively. Risk assets, including cryptocurrencies, surged, while the strength of the US dollar simultaneously tumbled. BTC/USD consequently gained over 3% in minutes, lifting the pair from local lows of $111,658. This level marked its lowest point since July 10, making the recovery particularly noteworthy.

Popular trader Daan Crypto Trades noted the immediate positive shift. He wrote on X, “Good bounce from the range low sweep on the back of a dovish Powell. Going to remain volatile for the rest of the day.” This sentiment reflected widespread relief and renewed confidence among market participants. Thus, the market quickly digested the news, pushing Bitcoin higher.

Jerome Powell’s Pivotal Address and Market Reaction

Jerome Powell’s speech at Jackson Hole proved instrumental in shaping market expectations. His nuanced language strongly suggested that the Federal Reserve is preparing to ease its monetary policy. This dovish stance implies a greater willingness to lower interest rates, which typically benefits risk assets. Such assets include equities and, significantly, cryptocurrencies like Bitcoin.

The immediate reaction saw a broad rise across various asset classes. This surge underscored the market’s sensitivity to central bank policies. Commentator TheKingfisher also highlighted crucial technical movements, noting that the price had absorbed bid liquidity during its earlier dip to the lows. This action often precedes a strong upward movement. Specifically, he observed:

$BTC High leverage liquidation map from this morning (5:40 ago) cleared 🎯 pic.twitter.com/22hlJiCMyV— TheKingfisher (@kingfisher_btc) August 22, 2025

This technical observation supported the fundamental shift driven by Powell’s comments. It also suggested that the market was positioned for a bounce, awaiting a catalyst. Consequently, Powell’s speech provided that crucial impetus.

Decoding the Impact of Fed Interest Rates

The prospect of lower Fed interest rates fundamentally changes the investment landscape. When interest rates decline, borrowing costs decrease, making it cheaper for businesses and consumers to access capital. This often stimulates economic growth and encourages investment in riskier assets, as traditional savings instruments yield less. Therefore, cryptocurrencies, perceived as high-growth, high-risk assets, tend to perform well in such environments.

Before Powell’s speech, considerable uncertainty surrounded the September FOMC meeting outcome. Many analysts held a hawkish view, anticipating the Fed would maintain higher rates due to persistent inflationary pressures and trade tariff concerns. However, Powell’s latest remarks significantly shifted this outlook. The market now largely anticipates a rate cut, creating a more favorable environment for digital assets.

Trader, analyst, and podcast host Scott Melker, known as the “Wolf of All Streets,” provided a timely technical analysis just before Powell began speaking. He noted:

• Bitcoin shows bullish divergence: This pattern often indicates an impending upward price reversal.
• Oversold RSI: The Relative Strength Index on 4-hour, 6-hour, 12-hour, and potentially daily charts signaled that BTC was oversold.
• Key $112K support: The price found strong support at this level.

Melker concluded, “Anything can happen, but always interesting when very strong signals appear in alignment with news events.” This convergence of technical indicators and fundamental news amplified the bullish sentiment. Thus, the market was primed for a significant move.

BTC Technicals Signal Strong Rebound Potential

The technical indicators for BTC painted a compelling picture of an impending rebound. As Scott Melker highlighted, the presence of bullish divergence across multiple timeframes is a powerful signal. This occurs when the price makes a lower low, but an oscillator like the RSI makes a higher low, suggesting that selling momentum is waning. Furthermore, an oversold RSI indicates that the asset has been sold off excessively and may be due for a price correction upwards.

The $112,000 level proved to be a critical support zone. This area likely attracted significant buying interest, preventing further declines. When combined with the dovish remarks from the Federal Reserve, these technical signals provided a robust foundation for the recent price surge. Traders often look for such confluence of fundamental and technical factors to confirm their investment decisions. The rapid increase in Bitcoin’s value demonstrated the market’s confidence in these combined signals.

BTC/USD one-hour chart. Source: Crypto News Insights/TradingView

BTC/USD four-hour chart. Source: Daan Crypto Trades/X

BTC/USD four-hour chart with RSI data. Source: Scott Melker/X

These charts visually confirm the price action and technical indicators discussed. They provide concrete evidence of the rebound and the underlying market dynamics. Consequently, the visual data reinforces the narrative of a strong recovery.

Market Analysis Points to September Rate Cut

Following Jerome Powell’s speech, comprehensive market analysis strongly suggests a high probability of an interest rate cut in September. The trading resource The Kobeissi Letter summarized the prevailing sentiment, stating, “It appears Fed Chair Powell is setting the stage for a September rate cut.” This widely held view is also reflected in financial instruments designed to gauge market expectations.

The CME Group’s FedWatch Tool, which tracks the probability of various interest rate outcomes, quickly updated to reflect this shift. It indicated a significant increase in the likelihood of a 25 basis point rate cut at the upcoming Federal Open Market Committee (FOMC) meeting. This tool provides real-time insights into investor sentiment regarding the Fed’s policy moves.

As Crypto News Insights previously reported, market participants faced considerable uncertainty regarding the September outcome. Powell’s prior hawkish tone, coupled with rising inflationary cues, created a cautious environment. However, his recent comments have provided much-needed clarity. This clarity has significantly boosted confidence across global financial markets, including the volatile cryptocurrency sector.

The Road Ahead for Bitcoin and Crypto

The implications of a potential interest rate cut extend beyond an immediate price pump. Lower interest rates generally lead to a weaker US dollar, making dollar-denominated assets like Bitcoin more attractive to international investors. Moreover, a looser monetary policy can encourage greater liquidity in financial markets, some of which often flows into alternative assets such as cryptocurrencies. Consequently, the broader crypto market may benefit from this shift.

Analysts will continue to scrutinize every statement from the Federal Reserve and economic data releases. These factors will provide further clues about the pace and extent of future rate adjustments. While the immediate outlook appears bullish, the cryptocurrency market remains inherently volatile. Investors should, therefore, remain vigilant and conduct thorough research.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.