TLDR
- Bitcoin dropped below $113,000 as early gains from Federal Reserve Chair Jerome Powell’s Jackson Hole speech quickly reversed
- Powell’s tone shift toward employment concerns initially boosted crypto confidence and raised September rate cut expectations
- Ethereum outperformed Bitcoin with nearly 9% gains while Bitcoin ended the week down 2.56%
- Bitcoin spot ETFs saw heavy outflows of $1.178 billion last week, while Ethereum ETFs had smaller outflows
- This week’s August PCE inflation data release will be crucial for determining Fed policy and market direction
Bitcoin fell under $113,000 on Monday as the cryptocurrency market’s post-Federal Reserve rally quickly unwound. The digital asset had initially surged following Federal Reserve Chair Jerome Powell’s Jackson Hole speech last week.
Powell’s remarks had initially boosted investor confidence despite appearing hawkish on paper. His shifted tone toward employment concerns led markets to expect a September rate cut. Bitcoin gained 4% immediately after the speech, while Ethereum surged over 13%.
The Fed Chair’s speech marked an important policy shift. Powell signaled the end of the “Average Inflation Targeting” framework, which had previously allowed inflation to run above the 2% target. The central bank now demands clear labor market weakness before cutting rates.
These changes were bearish in theory, making future monetary easing more difficult. However, markets focused on Powell’s changed tone rather than the hawkish details. He repeatedly highlighted downside risks to the labor market and stressed the need for policy adjustments.
Powell also downplayed concerns about potential price increases from tariff policies. He labeled them “transitory” and argued that a cooling labor market would prevent temporary price shocks from becoming long-term inflation. This signaled the Fed now emphasizes employment stability over strict inflation control.
September Rate Cut Expectations Build
Former St. Louis Fed President James Bullard cemented market expectations in a CNBC interview. He stated that Powell’s remarks essentially signal a 25-basis-point rate cut in September. Bullard suggested room for up to 100 basis points in cuts through next year.
However, not all Fed officials agree. Kansas City Fed President Jeffrey Schmid warned against cutting rates too quickly. He noted inflation remains closer to 3% than the 2% target and stressed caution about reigniting demand.
Cleveland Fed President Beth Hammack echoed these concerns. She emphasized that inflation remains too high while the labor market stays stable at around 4.2% unemployment. Hammack said she would not support rate cuts if the meeting were tomorrow.
Powell himself noted any potential cut should not start a prolonged easing cycle. He stated the Fed would not allow a one-time price increase to become an ongoing inflation problem. This suggests a maximum of two cuts this year. What’s
Ethereum Outshines Bitcoin Performance
Last week showed clear market divergence between the two largest cryptocurrencies. Despite the positive macro environment, Bitcoin ended down 2.56% for the week. The digital asset dropped about $10,000 in just ten days.
Ethereum posted weekly gains of 8.98% in stark contrast. Data suggests new buying interest from Digital Asset Trading firms drove the rally. This strength overshadowed Bitcoin’s lackluster performance throughout the period.
Exchange-traded fund flows reflected this divergence. Bitcoin spot ETFs saw major net outflows of $1.178 billion last week according to Farside Investors. Ethereum spot ETFs had much smaller net outflows of just $241.1 million.
From August 18 to August 22 (ET), Bitcoin spot ETFs recorded a net outflow of $1.17 billion last week, led by BlackRock’s IBIT with $615 million in outflows. Ethereum spot ETFs saw a net outflow of $238 million, ending a 14-week streak of net inflows.https://t.co/YcNXWVZGwE pic.twitter.com/U7BspSGBEH
— Wu Blockchain (@WuBlockchain) August 25, 2025
Some analysts maintain bullish year-end targets despite current weakness. VanEck keeps a $180,000 Bitcoin price target, though current momentum favors Ethereum. Market experts warn of a potential “September slump” despite Ethereum’s recent strength.
Bitcoin temporarily recovered above $113,000 after falling to a six-week low of $110,600. Most altcoins, including the previously strong Ethereum, declined alongside Bitcoin’s sudden drop. The recovery proved short-lived as selling pressure continued.
Technical analysis suggests Bitcoin faces a critical decision zone. Analyst CryptoMichNL noted Bitcoin needs to print a higher low in the current region to preserve momentum. Failure to hold could lead to new lows, which he frames as an ideal accumulation area.
I’d like to see $BTC make a higher low in this region.
If not, then we’re likely going to give it all back and make new lows = ideal region to accumulate.
Volatile week coming up. pic.twitter.com/LSGtL880ol
— Michaël van de Poppe (@CryptoMichNL) August 24, 2025
This Friday’s economic data will prove crucial for market direction. The August Personal Consumption Expenditures price index will be released alongside the University of Michigan’s inflation expectations survey. These indicators will provide essential clues ahead of the September Federal Open Market Committee meeting.
