Crypto-related stocks and digital assets rallied sharply on Friday after U.S. Federal Reserve Chair Jerome Powell signaled that the central bank could begin cutting interest rates as early as September, sparking renewed optimism across risk markets.
Shares of key crypto firms, including Circle, eToro, Marathon Digital, Coinbase, MicroStrategy, and Robinhood, surged in tandem with Bitcoin and Ethereum, as Powell’s comments suggested that the Federal Reserve may be nearing the end of its tightening cycle after more than a year of elevated interest rates.
The renewed possibility of rate cuts is breathing fresh life into digital assets and blockchain-linked equities, which remain highly sensitive to shifts in U.S. monetary policy.
Circle, Marathon, eToro Lead Crypto Equity Rally
Leading Friday’s rally was Circle (CRCL), the stablecoin issuer and soon-to-be public company, which rose 7% on the day, outperforming broader tech and crypto-linked peers. Circle’s jump reflected investor confidence that lower borrowing costs could improve institutional stablecoin adoption and accelerate fintech growth.
eToro (ETOR), the social trading platform with a growing crypto footprint, also rallied 6%, alongside Marathon Digital (MARA), one of the largest publicly traded Bitcoin mining companies in North America.
Coinbase (COIN) gained 5%, reversing losses from earlier in the week, while MicroStrategy (MSTR) - the enterprise software firm known for its multi-billion-dollar Bitcoin holdings - climbed 4%. Robinhood (HOOD), which reported strong crypto-related revenue in its latest earnings, also advanced 3%.
The rally came amid a broader uptick in risk assets, with both the S&P 500 and Nasdaq Composite ending the day higher. Bitcoin (BTC) climbed to $115,843, while Ethereum (ETH) pushed above $6,400, extending their monthly gains.
Powell Opens Door to September Rate Cut
Markets responded to a series of remarks made by Powell during a moderated discussion, in which he acknowledged shifting economic dynamics and suggested the Federal Reserve is more open to easing monetary policy than previously expected.
“The balance of risks appears to be shifting,” Powell said. “While inflation remains a concern, the labor market shows signs of cooling in both supply and demand.”
Though the Fed chair stopped short of promising a cut, his tone marked a departure from the hawkish stance he maintained throughout the first half of the year. It also hinted that data dependence, rather than rigid policy, would guide decisions heading into the fall.
Importantly, Powell emphasized that any cut would be measured and cautious, particularly with inflation still slightly above the central bank’s 2% target. But to investors, the takeaway was clear: a September rate cut is back on the table.
Monetary Policy and Crypto: Why Rate Cuts Matter
Crypto assets, particularly Bitcoin and Ethereum, have long been sensitive to monetary policy. The relationship is simple: lower interest rates reduce the cost of capital, boost liquidity, and increase the appeal of riskier, non-yielding assets like cryptocurrencies.
The sharp gains in crypto-adjacent equities - such as miners, fintechs, and exchanges - reflect renewed risk appetite and expectations for improved profitability in a lower-rate environment.
- For miners like Marathon, lower energy costs and higher BTC prices widen margins.
- For exchanges like Coinbase and eToro, increased trading activity from retail and institutional clients could return.
- For stablecoin issuers like Circle, which relies on yield from U.S. Treasury reserves backing USDC, rate shifts impact both earnings and policy outlooks.
Political Pressure Adds Weight to Rate Cut Debate
Powell’s comments also come against a backdrop of increasing political pressure on the Fed. U.S. President Donald Trump, who is seeking re-election in November, has been vocal in urging the Fed to lower interest rates to stimulate the economy and ease pressure on borrowers.
Though the Fed remains officially independent, the political calculus is hard to ignore - especially with the labor market showing signs of fatigue and consumer debt delinquencies rising.
Powell acknowledged the economic ambiguity in his remarks, noting that while the unemployment rate remains low, “it is a curious kind of balance” with muted wage growth and flattening job creation.
This nuance helped temper fears of a premature policy shift, while reinvigorating investor optimism that the Fed is approaching a turn in its policy stance.
Market Sentiment: Confidence Returns, But Volatility Lingers
Following Powell’s statements, futures markets priced in a 63% probability of a rate cut in September, up from just 42% earlier in the week, according to CME’s FedWatch tool. Bond yields declined slightly, while tech stocks and crypto outperformed.
Analysts noted that the crypto market’s response indicates growing institutional re-engagement with digital assets. After months of sideways trading and ETF-driven flow stagnation, the prospect of looser financial conditions could act as a strong catalyst.
“Crypto thrives on liquidity, and Powell just opened the taps,” said Josh Lipsky, former IMF advisor and director at the Atlantic Council’s GeoEconomics Center. “Even the hint of a pivot can be enough to reignite flows into digital risk assets.”
Still, some caution remains. If inflation data surprises to the upside or labor conditions tighten, the Fed could delay or dilute its easing plans, potentially undercutting recent gains.
Circle’s Rise Reflects Growing Stablecoin Relevance
The outsized gain in Circle’s shares is especially notable, as it reflects broader confidence in the regulatory progress around stablecoins and the company’s improving market position after a challenging 2023.
Circle has expanded USDC integrations across multiple chains, strengthened partnerships with major financial institutions, and worked closely with U.S. lawmakers on crafting stablecoin legislation. Lower interest rates could soften competition from high-yield DeFi products and reinforce the utility of regulated, dollar-backed stablecoins in payments and settlements.
As the company prepares for a potential public listing later this year, investor sentiment appears to be warming.
Final thoughts
With crypto markets increasingly entangled with traditional finance, the Fed’s next move could be pivotal. A rate cut in September - especially if paired with continued ETF inflows and positive macro signals - may catalyze the next leg of the crypto bull cycle.
While uncertainties remain, Friday’s rally reflects growing confidence that crypto’s most formidable headwind - tight monetary policy - may soon begin to ease.
For crypto-native firms and investors alike, the question now isn’t whether the pivot is coming - but how far and fast it might go.