Virtual Assets Plunge Amid Fed's Cautious Stance on Rate Cuts... Focus on Powell's Remarks

Doohyun Hwang

Summary

It was reported that virtual asset prices plummeted following senior Federal Reserve officials’ cautious stance on rate cuts.
Investors are paying keen attention to the remarks of Federal Reserve Chair Jerome Powell at the Jackson Hole meeting.
RGA Investment Advisors noted that additional profit-taking and market volatility may increase depending on whether Chair Powell hints at a rate cut in September.

Virtual Asset Prices Fall Across the Board

"If No Indication of Cuts at Jackson Hole, Profit Taking Likely"

As senior officials of the Federal Reserve System have consecutively expressed cautious views, expectations for a rate cut in September have weakened. Now, investors' attention is focused on Jerome Powell, Chair of the Federal Reserve, and what he will say. Powell is scheduled to deliver a speech at the Jackson Hole meeting on the 22nd (local time).

Beth Hammack, President of the Federal Reserve Bank of Cleveland, stated in a Yahoo Finance interview on the 21st, "Based on current data, there isn't enough justification for a rate cut in September," adding, "If there were a meeting tomorrow, there would be no reason to lower the rates." Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, also said a "September rate cut is premature," emphasizing, "The employment report for August, to be released on September 5, will determine future decisions."

These comments dampened investor sentiment and were immediately reflected in the prices of virtual assets (cryptocurrencies). Bitcoin (BTC) fell to $112,305, down 1.73% from the previous day, while Ethereum (ETH) dropped 2.90% to $4,215. XRP, Binance Coin (BNB), and Solana (SOL) declined to $2.84 (-3.67%), $838 (-3.68%), and $180 (-3.97%), respectively, widening their losses.

Rick Gardner, CIO of RGA Investment Advisors, commented, "Stock prices are currently at very high levels, and investors are hoping Chair Powell will signal a rate cut in September." He added, "Especially considering the low trading volume in August and risk aversion heading into the weekend, if Powell's remarks fall short of market expectations, some investors may retract their bets."