The cryptocurrency market has experienced a dramatic resurgence, with Ethereum spearheading a powerful rally that has seen it eclipse its 2021 all-time high. This monumental surge, which also lifted other major digital assets and even traditional markets, was directly ignited by a significant shift in the Federal Reserve's monetary policy stance, hinting at easier financial conditions ahead.
Powell's Dovish Stance Ignites Market Momentum
The catalyst for this market-wide rally came from Federal Reserve Chair Jerome Powell, whose dovish remarks at the Jackson Hole symposium signaled a potential pivot towards interest rate cuts. Powell's statement, suggesting that "the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," immediately fueled speculation of a 25 basis point rate cut as early as September. Market odds for such a cut surged from 57% to 79% within hours, as analysts noted the Fed Chair's apparent shift in emphasis from inflation concerns to employment. This newfound optimism regarding monetary policy spurred an immediate market reaction, with the total crypto market cap reclaiming the $4 trillion mark.
Ethereum Leads a Broad Market Surge
In the wake of Powell's comments, Ethereum (ETH) recorded a blistering rally of over 15% in just 24 hours, decisively surpassing its 2021 all-time high of $4,869.47 to trade at $4,888. This breakthrough marks a remarkable recovery for Ethereum, which had touched a multi-year low of $1,385.41 in April 2025. The positive sentiment permeated across the broader market, with Bitcoin jumping over 4% to reach approximately $117,000, and major altcoins like BNB, XRP, Solana, and Dogecoin posting substantial gains. Traditional financial markets mirrored this performance, as the S&P 500, Nasdaq, and Dow Jones Industrial Average all saw gains. However, the rapid ascent also caught many off guard, leading to over $553 million in liquidated positions, predominantly affecting short sellers. The anticipation of expanded liquidity from potential Fed rate cuts suggests that this current momentum in the crypto market could continue, with digital assets remaining closely tethered to global monetary policy decisions.
