Key Takeaways
- After last week’s dovish speech from Fed Chair Jerome Powell, crypto markets remain range bound.
- Major inflation data to land out of the US this Friday, in what’s been a mixed bag month of inflation results.
- Chart of the week: The impact inflation and policy news on BTC’s Price in August.
Crypto markets are approaching a real trust fall moment.
Now, granted, that might sound weird. But follow me here for a few minutes and I’ll tell you why.
Bitcoin and the majors are hovering just above or below their weekly opens. It’s a sharp contrast to the explosive rally we saw last week on the back of an unexpectedly dovish shift from US policymakers.
That pivot came after Fed Chair Jerome Powell’s speech at Jackson Hole (told you it would be important!). A gathering that has become something of a stage for setting the tone of global markets over it’s history. Just last year, Powell used the same forum to lay out the first real pathway toward rate cuts, a departure from the aggressive inflation-fighting stance of 2022–23.
Investors were again hanging on every word – and below are my takeaways.
“This unusual situation suggests that downside risks to employment are rising,” Powell said, acknowledging as a change of pace that the employment landscape in the US could be headed for layoffs and a spike in unemployment. In his recent appearances, Jerome Powell has commented that the labour market is healthy, so this is an important shift in messaging as employment is a key mandate for the Fed.
All-in-all, it was a clear and bold change in tone from the Fed Chair. It now seems close to inevitable that easing in monetary policy can be expected in some shape or form in September.
The market has been quick to react, forecasting a 0.25% rate cut in the US for the September meeting as an 88% probability, at the time of writing.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Still, inflation has been a key driver in August (more on that below). But importantly we get to test the market’s conviction on Jerome’s words in the coming days.
The trust test
The stage is set for the next major piece of market data, which will land in just a few days. Obviously, the market has cemented their view that a rate cut is coming, but will it hold its nerve if we see something unexpected?
We don’t have to wait long to find out, with Personal Consumption Expenditures (PCE) price index figures landing at 10:30pm AEST on Friday the 29th of August.
This will be a test for whether market believes that policy makers will ease interest rates even with a jump in inflation metrics. Seeing risk markets move lower on a higher-than-expected PCE print could show us there are some trust issues.
And you can see why when we look at the recent track record.
Chart of the week: The impact inflation and policy news on BTC’s Price in August.
Below is a breakdown of the major inflation data releases this month. The Fed’s key message in 2025 has been consistent: inflation is not yet under control, and that means policy is likely to remain steady. The only caveat is the labour market. And as we heard from Jerome Powell last week, signs of weakness there could shift the outlook.
You might remember that earlier this month CPI inflation data came in as expected, which was followed by Bitcoin hitting all-time highs soon after. Then PPI inflation landed well above expectations, and we saw a sharp decline.
Hence the trust issues.
This sets the stage for PCE. If it comes in at or below expectations, we could see a similar reaction to the CPI print. Especially with renewed concerns about the labour market. But if it comes in hotter than expected, the market could face a real conviction test. Would we see the same kind of reaction as with the PPI print? Or a calmer response this time?
Let’s find out.
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