Crypto Macro Report: Powell Turns Dovish, ETH Hits New ATH — Macro Logic & Structural Outlook!
On August 22nd, Fed Chair Jerome Powell struck a clear dovish tone at Jackson Hole, hinting at a likely 25 bps rate cut in September. Markets priced in a 91.1% probability of easing, sparking a broad risk asset rally. U.S. equities closed higher, and crypto’s total market cap climbed back above $4.1T. ETH jumped 14.33% in a single day, hitting a new ATH at $4,956 and lifting the entire Layer2 and staking sectors.
On-chain flows showed a clear BTC → ETH rotation, with whales adding leverage through perpetual rollovers. Arthur Hayes and others suggested ETH breaking ATH could open upside toward $10K–$20K. Still, some Fed voices remain cautious, liquidity conditions are volatile, and short-term risks of overheated sentiment + incoming data loom large.
1. Macro Backdrop: The Fed Pivot
Powell’s final Jackson Hole appearance of his term turned into the week’s defining event. Contrary to expectations of continued hawkishness, he flagged mounting labor market risks and downplayed tariff-driven inflation as “one-off.” He also dropped the 2020 “average 2% inflation target,” restoring a flexible inflation framework — giving the Fed more room to act if jobs weaken. His language was a near-open signal for September cuts.
Markets reacted instantly. CME FedWatch odds of a 25 bps cut spiked from 75.5% to 91.1%. Risk assets ripped: S&P, Nasdaq, and Dow all +1.5%+ on the day, crypto market cap reclaimed $4.1T, and ETH surged past its old high. Liquidity-sensitive, high-beta assets are the clearest winners — ETH foremost among them.
Still, caution remains: August CPI and NFP data could shift expectations. Powell’s pivot reframed the Fed from “inflation-first” toward “jobs-first,” which is a tailwind for risk assets, but only if data confirms.
2. Market Structure Shifts: BTC Out, ETH In
Post-Powell, crypto markets showed sharp structural divergence:
- BTC struggled despite macro tailwinds. Spot ETFs saw $1.165B weekly net outflows, weighing on price. Dominance kept sliding, showing its “safe haven” function is weakening. BTC is increasingly the source of capital, not the destination.
- ETH became the cycle’s core asset. Up 14.33% in one day, ETH flipped into price discovery, fueled by liquidations ($368M in ETH shorts wiped in 24h, surpassing BTC). Its breakout was not just sentiment — real flows supported it.
- ETH spillover effect:
- Layer2s: ARB +9.5%
- Staking: SSV +25.5%
- Restaking: ETHFI +20.7%
ETH has turned into a liquidity magnet, pulling capital into its entire ecosystem.
Altseason signals are lit: capital rotation is clear, BTC dominance is sliding, and risk is cascading down the stack — ETH → L2s → large-cap alts → mid/small-caps. But with it comes classic altseason risks: leverage, churn, and blow-up potential.
3. ETH vs BTC: Core Logic
ETH:
- Macro tailwind: most sensitive to liquidity expansion.
- Structural strength: PoS staking (⅓ supply locked), Layer2 scaling growth, and restaking narratives create a three-pillar base.
- Investor sentiment: whales, VCs, and KOLs (Arthur Hayes: “If ETH breaks ATH, upside opens to $10K–$20K”).
- Role shift: From “speculative asset” → “new financial infrastructure.”
BTC:
- Macro role fading: as “digital gold,” its inflation-hedge appeal is weaker under tariff-driven inflation (not demand-driven).
- ETF flows negative: $1.165B net out, whales rotating into ETH.
- Market share falling: dominance down from ~50% to <45%.
- Outlook: BTC becomes the “defensive base layer” for portfolios, not the growth driver. Its role is shifting from engine to anchor.
4. Risks & Uncertainty
Despite ETH’s ATH breakout, risks are elevated:
- Fed divergence: Not all FOMC members agree — cuts could be delayed.
- Data dependency: August CPI + NFP are critical. Strong prints could wreck the rate-cut trade.
- Leverage buildup: $3.68B ETH short squeeze shows whales using high leverage. If narrative breaks, cascading liquidations are a real risk.
- Regulatory overhang: U.S. + global policy shifts (Trump tariffs, MiCA in EU, Asia capital controls) could throttle inflows.
5. Conclusion
Powell’s Jackson Hole dovish pivot ignited risk-on sentiment, pushing ETH to new ATHs and reshaping crypto’s market structure.
- Liquidity Repricing: Fed shift from “inflation-first” → “jobs-first” sets the stage for easing, favoring ETH over BTC.
- Market Structure Reset: BTC outflows vs ETH-led rally mark ETH as the new cycle’s liquidity magnet.
- On-chain + Sentiment Resonance: Whales rotating, leverage expanding, and KOL conviction fueling ETH dominance.
ETH is now the cycle leader, but risks remain. Sustainability hinges on Fed follow-through and ETH holding its new structural role at the top of the market.
What’s your thoughts on September, are you bullish on rate cuts?
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