Markets Brace for Powell’s Remarks as Crypto Drops — Here Are 8 Arguments Against a September Cut

Crypto Markets Sink as Traders Brace for Fed Minutes, Powell’s Jackson Hole Remarks

Digital assets extended losses Tuesday as risk-off sentiment gripped markets ahead of two critical events: the release of July FOMC minutes and Federal Reserve Chair Jerome Powell’s keynote at the Jackson Hole symposium. Traders are positioning for the possibility of a hawkish tone, which could delay expected rate cuts.

Bitcoin dropped 3.2% to fall below $114,000, while Ethereum slid 5.3% to under $4,200. Altcoins followed suit, with XRP down 6.2% and Cardano’s ADA plunging 8%, dragging the broader crypto market lower by 3.2%.

Losses deepened across crypto-linked equities. Marathon Digital (MARA) fell 5.7%, Coinbase (COIN) declined 5.8%, and MicroStrategy (MSTR) dropped 7.4%, extending its retreat as the largest corporate holder of BTC.

By comparison, traditional equity markets were more resilient. The Dow finished flat, the S&P 500 dipped 0.59%, and the Nasdaq shed 1.5%. The disparity underscores crypto’s greater vulnerability to interest rate uncertainty, given its reliance on cheap liquidity and speculative flows.

A Critical Week for Rate Expectations

Wednesday’s FOMC minutes — covering the July 29–30 meeting — are expected to shed light on the Fed’s thinking around tariffs, inflation, and policy flexibility. Meanwhile, Powell’s Friday address in Jackson Hole may offer clues about the central bank’s September decision, with investors looking for any signal on timing or magnitude of future rate moves.

Eight Reasons the Fed May Hold Off on Rate Cuts

1. Delayed Tariff Impact
   Companies have been absorbing tariff costs to protect pricing, but that strategy has limits. Once passed on, inflation may re-accelerate, justifying continued restraint from the Fed.
2. Stubborn Price Pressures
   While headline inflation has eased, producer prices remain elevated. This suggests underlying cost inflation still poses risks.
3. Corporate Margin Compression
   Executives warn they may soon pass rising costs to consumers. If realized, that could push inflation higher into Q4, deterring September easing.
4. Conflicting Macro Signals
   Slower hiring trends contrast with still-strong consumer spending, giving policymakers mixed signals on whether the economy is cooling fast enough.
5. Policy Crosswinds
   Tariffs are interacting with fiscal policy and global trade frictions, complicating the Fed’s forecasting ability and favoring caution.
6. Historical Lessons
   Past tariff shocks took time to show up in inflation metrics. Powell may cite the 2018–2019 playbook in defending a slower approach.
7. Upcoming Economic Data
   Flash PMI readings for August, due Thursday, could reveal growing input cost pressures — giving the Fed one more reason to pause.
8. Internal Fed Divergence
   The July minutes could highlight a growing divide between inflation-focused hawks and growth-sensitive doves. Powell may signal a wait-and-see consensus to preserve unity.

What It Means for Crypto

Crypto assets are particularly rate-sensitive. Higher borrowing costs reduce access to leverage, increase mining expenses, and dampen speculative demand. A hawkish Powell could worsen the current sell-off, while a dovish pivot might offer a temporary relief rally.

For now, markets remain defensive, and liquidity-driven assets like crypto are bearing the brunt of uncertainty.

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