Why Dogecoin Is Skyrocketing Today

Key Points

• Dogecoin is jumping today following a speech by Federal Reserve chair Jerome Powell.

• Powell's speech seemed to suggest that the Fed will cut interest rates next month.

• The outlook on interest rates is one of the most important performance catalysts for Dogecoin.

• 10 stocks we like better than Dogecoin ›

Dogecoin (CRYPTO: DOGE) is surging in Friday's trading following some bullish macroeconomic news. The cryptocurrency's token price was up 9.4% over the past 24 hours of trading as of 12:45 p.m. ET. At the same point in the day, Bitcoin was up 3.4%, and Ethereum had risen 12.2%.

These cryptocurrencies are rising rapidly today thanks to a speech given by Federal Reserve chair Jerome Powell this morning. In the speech, Powell seemed to indicate that the Fed is on track to cut interest rates next month.

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Dogecoin jumps on interest rate outlook

Inflation concerns roiled the cryptocurrency market earlier this week, but investors got some very good news this morning. At his speech in Jackson Hole, Wyoming, Powell indicated that economic dynamics had shifted in a way that supports cuts for interest rates. While he noted that inflation remained "somewhat elevated," the Fed leader said that risks posed by higher interest rates to employment have recently taken on added weight.

Powell also said that the Fed was doing away with a policy enacted by the central bank five years ago that favored keeping interest rates higher over the long term. All in all, the Fed chair's speech delivered some very encouraging news for Dogecoin and other cryptocurrencies.

What's next for Dogecoin?

Indications that the Fed is poised to deliver an interest rate cut at its September meeting suggest that a major near-term risk factor for Dogecoin could soon be taken off the table. Data published last week showed that U.S. wholesaler inflation wound up being much higher than expected in July, and quarterly reports and commentary issued by Home Depot and Target this week raised fears that inflationary pressures could cause the Fed to be more reticent when it comes to cutting rates.

However, with signs that investors will be getting a long-desired interest rate cut next month, the crypto bull rally could be back on.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Home Depot, and Target. The Motley Fool has a disclosure policy.