After more than two and a half years of aggressive monetary tightening, U.S. Federal Reserve Chairman Jerome Powell is widely expected to indicate an impending shift towards easing monetary policy.
What Happened: Powell's highly anticipated keynote address at the Kansas City Fed's Jackson Hole Economic Symposium is scheduled for Friday at 10 a.m. ET, and this event has historically been used by Fed chairs, including Powell, to signal significant changes in central bank policy, Coindesk reported.
Market participants have been preparing for this shift for some time, with traders already pricing in a 100% probability of at least a 25 basis point rate cut at the Fed's upcoming September meeting.
This sentiment was further reinforced by the release of the FOMC minutes from the Fed's July policy meeting, which revealed that a "vast majority" of participants believe a rate cut in September is "likely appropriate."
Analysts expect Powell to not only confirm the September rate cut but also to adopt a cautious stance on further easing.
This could mean that the Fed might reduce rates by just 25 basis points in September and signal to markets that a continuous series of cuts should not be anticipated in the near future.
In the lead-up to this anticipated easing cycle, U.S. financial markets have largely remained buoyant.
Despite a brief dip from mid-July to early August, the S&P 500 is currently trading only about 1% below its all-time high reached in early July, while the Nasdaq is approximately 4% off its peak.
Gold has also seen a surge, hitting a record high of $2,566 earlier this week.
The bond market is similarly optimistic, with the yield on the 10-year U.S. Treasury dropping to a multi-year low of 3.77%.
Why It Matters: However, Bitcoin (CRYPTO: BTC) has been struggling to gain traction.
Although it has recovered from the early August sell-off that briefly pushed prices below $50,000, Bitcoin remains significantly below its all-time high of around $73,500, reached back in March.
This lackluster performance is notable given other positive factors in the crypto space, including rising institutional interest and continued inflows into spot ETFs.
Moreover, Bitcoin could benefit from recent developments on the regulatory front.
According to an ABC News report, crypto-friendly Robert F. Kennedy Jr. is considering withdrawing from the presidential race on Friday and endorsing GOP candidate Donald Trump, who is also known for his favorable stance towards cryptocurrencies.
On the Democratic side, a senior official from Kamala Harris's campaign hinted that a Harris administration would be more supportive of the crypto industry than the current Biden administration.