Crypto markets slump ahead of Powell’s Jackson Hole speech

Bitcoin, Ethereum and other major cryptocurrencies slipped on Monday morning as global markets turned cautious ahead of Federal Reserve chair Jerome Powell’s keynote at the Jackson Hole Economic Symposium later this week.

Bitcoin fell more than 2% in 24 hours to trade just above $115,500, according to Kraken’s price feeds. Ethereum dropped over 4% to $4,340, while XRP slid 4% to around $3.00. Solana, Dogecoin and Cardano also posted steeper losses, with SOL down 5% and ADA tumbling nearly 6%. The global crypto market cap shrank to $3.99 trillion, shedding nearly 3% overnight.

Powell’s final Jackson Hole appearance

The selloff mirrors broader risk aversion across financial markets as traders brace for Powell’s final Jackson Hole appearance before stepping down as Fed chair. The Wyoming summit has often been a stage for defining policy shifts. In 2022, Powell invoked Paul Volcker in a vow to crush inflation “whatever the cost.” Last year, he hinted at loosening, saying “the time has come for policy to adjust.”

This time, Powell is expected to address stubborn inflation — still above the Fed’s 2% target — alongside a cooling labor market. Futures markets have priced in a September rate cut, but analysts caution Powell may avoid confirming it this week.

Liquidations 

Liquidation data underscored the volatility. More than $567 million worth of crypto positions were wiped out in the past 24 hours, with long traders hit hardest. Ethereum alone saw liquidations above $14 million, while Bitcoin accounted for nearly $3 million, per data from CoinGlass.

Trading firm QCP Capital flagged early warning signs. “BTC perpetuals across major venues started to trend lower since Friday,” the firm explained. “For example, the BTC funding rate on Deribit, which was consistently above 20% for the past week, turned negative by Saturday and stayed there even as spot drifted higher over the weekend. A similar pattern on 1 August preceded a drop from 118k to 112k.”

That divergence between spot and futures markets has traders bracing for more turbulence. According to QCP, “Options flows are now skewed towards another leg lower as risk reversals have swung in favour of puts across tenors,” suggesting investors are paying up for downside protection ahead of Powell’s speech.

Inflation complicates the Fed’s hand

Hole comes at a delicate moment for monetary policy. Producer prices jumped 0.9% in July — far above the 0.2% forecast — raising questions about inflation’s persistence. “Thursday’s higher-than-expected PPI numbers have complicated the Fed’s policy framework,” QCP said, adding that “the market will be looking for hints on the Fed’s thinking ahead of its September policy meeting.”

Despite the anxiety, QCP sees limited breakout risk in the immediate term. “With implied vols still relatively low, the market does not expect a major breakout. Sideways trade seems likely, with dips near 112k attracting buyers and rallies toward 120k meeting supply, at least until Friday when Fed Chair Jerome Powell takes the stage,” the firm said.

Meanwhile, institutional players continue to accumulate. Tokyo-listed Metaplanet disclosed it had added 775 BTC over the weekend, underscoring long-term confidence even as near-term sentiment weakens.