Powell Sparks Risk Rally, Crypto Treasuries Keep Buying

Key Takeaways

• Powell’s Jackson Hole remarks triggered a broad risk rally, favoring small caps
• A large BTC-to-ETH swap on Hyperliquid fueled ETH’s latest ATH
• Digital asset treasury companies continue to aggressively accumulate

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Digital Asset Commentary

Fed Chair Powell’s Jackson Hole speech last week, hinting at a possible September rate cut due to labor market weakness, sparked strong buying in risk assets and rate-sensitive names. The rally was likely amplified by traders positioned for a more hawkish tone. The Russell 2000 ETF (IWM) gained nearly 4%, while Ethereum surged 14%, adding about $73 billion in market cap. Since March 2020, ETH and IWM have been closely correlated, underscoring ETH’s sensitivity to rates and risk sentiment.

On Sunday, during thin liquidity, a trader swapped 20,000 BTC for ETH on the decentralized exchange Hyperliquid, seemingly to push ETH higher while pressuring BTC. The trader also went long ETH via perpetual futures. ETH briefly hit a new all-time high as BTC dropped over 3% before stabilizing. Estimates suggest the trader profited at least $185 million and still controls 78,000 BTC across related wallets.

Technicals for both BTC and ETH point to the risk of a pullback in an already seasonally weak September. Adjusted Ichimoku Cloud settings, better suited for 24/7 markets, show a setup resembling February 2025, when price moved through the Cloud. A bearish Tenkan-Kijun cross, which would confirm reversal, has not yet formed. BTC remains neutral relative to the Cloud, while ETH is firmly bullish but stretched. A BTC retrace could drag ETH down toward the Kijun at $3,680. Conversely, a close above $118k for BTC would likely invalidate both bearish scenarios.

Regardless of rates, seasonality or technicals, digital asset treasuries continue to load the boat and signal more buying to come. Recent activity includes Strategy’s purchase of 3,081 BTC for $356.9m, Tom Lee’s Bitmine acquiring over $800m of ETH, and new treasury initiatives targeting a $1b raise for Solana and $400m for BNB.