Ether surges, trading close to its record again after Powell speech teasing rate cuts

The price of ether rebounded to near-record levels on Friday after Federal Reserve Chair Jerome Powell hinted at upcoming rate cuts and investors returned to risk-on mode.

The second-largest cryptocurrency was last higher by nearly 14% at $4,817.61, according to Coin Metrics. Earlier, it traded as high as $4,856.61, hovering at its 2021 all-time high of $4,866.01.

Bitcoin rose 4% to $116,820.01.

The moves came 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 seem 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 setting up of a September rate cut is causing a panicked repositioning, which could continue 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.

Around the time of the speech, ETH saw about $120 million in short liquidations in a one-hour period, according to CoinGlass. When traders use leverage to short ether and the coin’s price rises, they buy ETH back from the market to close their positions. In turn, this pushes the coin’s price even higher and results in more positions being liquidated.

Shares of companies focused on accumulating ether, which were some 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.

Shares of Peter Thiel-backed ETHzilla tumbled more than 31% at one point Friday after the ether treasury company offered up to 74.8 million of its shares for resale. It was last down 30% 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.

Ether exchange-traded funds saw $287.6 million in inflows Thursday, which snapped a four-day streak of outflows, according to crypto research platform SoSoValue. Still, those funds collectively were on pace for their first week of net outflows ($578.9 million) since May 9 and biggest week of outflows on record.

Bitcoin ETFs on Thursday logged their fifth session in a row of outflows, bringing their total for the week to $1.15 billion. They are now on pace for their biggest week of net outflows since Feb. 28.