Powell's Reversal at Jackson Hole: Bitcoin Breaks Through $116,000

Jerome Powell caught everyone off guard at Jackson Hole by adopting a much more accommodative monetary stance. This unexpected change in tone immediately boosted risky assets. Bitcoin, at the forefront, broke through $116,000. This strategic reversal could mark a major turning point in the Fed’s direction.

A speech marking a strategic turning point

Jerome Powell delivered on Friday one of his most accommodative speeches in many months.

The Federal Reserve Chairman reaffirmed that the institution remains fully willing to adjust its monetary policy according to economic indicators’ developments. A decidedly more flexible stance, contrasting with the firmness shown during previous interventions.

Among the strong signals of this reversal, the Fed has officially abandoned its inflation “catch-up” strategy, in place since 2020. 

Powell also downplayed the impact of recent price increases caused by tariffs, calling them “largely temporary.” This thorough revision of the strategic framework marks a break from the aggressive preventive approach adopted in recent years.

Another key indicator of this repositioning: the priority now given to employment. The rise of the unemployment rate to 4.2% and the visible slowdown in job creation led the central bank to recognize the risks of excessive tightening.

The Fed now seeks to preserve labor market stability by avoiding overly prolonged monetary tightening that could worsen the situation.

Finally, this shift occurs in a particularly tense political context. Caught between pressure from the White House and the need to preserve the central bank’s independence, Powell seems to opt for a balancing strategy. By favoring moderate and pragmatic communication, he reassures the markets while defending the institution’s credibility.

Bitcoin benefits from monetary uncertainty

The bitcoin reaction was swift. In just a few hours, the cryptocurrency jumped more than $3,000, rising from around $112,000 to an intraday high of $116,063. 

This movement reflects an immediate reading of the markets: the Federal Reserve’s more accommodative tone opens the way to a weakening dollar, which directly benefits alternative assets like bitcoin.

This renewed strength also reflects bitcoin’s growing role in institutional investment strategies. Increasingly seen as a strategic store of value, it establishes itself in portfolios as a hedge against expansionary monetary policies and inflationary risks.

Wall Street also welcomed Powell’s speech positively, with widespread gains across indices. Markets now anticipate possible rate cuts if economic data continue to deteriorate.

The Fed now seems to favor flexibility over rigidity, a shift that has clearly reassured crypto markets. But this more measured shift could also take place in a highly tense political context. 

At a time when criticism is raining down on the institution, this more conciliatory stance would not only aim to stabilize the economy… It could also, implicitly, help preserve a certain balance within the central bank itself.