Why Ethereum Jumped 13% Today

Key Points

• Ethereum jumped about 13% after Jerome Powell's Jackson Hole comments hinted at possible rate relief in September.

• Lower interest rates generally lift risk assets because cheaper capital encourages more speculative trades.

• Investors should expect turbulence, but Ethereum has a bright long-term future.

• 10 stocks we like better than Ethereum ›

Ethereum (CRYPTO: ETH) skyrocketed on Friday. As soon as Federal Reserve Chairman Jerome Powell suggested that interest rates might come down in 2025, Ethereum's price took off on a rocket ride. The coin was up 13% at 2:24 p.m. ET, reaching prices not seen since November 2021.

Powell's hinted rate cuts sent Ethereum higher

Lower interest rates on federal debt papers often inspire strong returns for investors in high-risk assets. If it's easy to find cheap capital, it's easier to risk some money on more speculative trades. Ethereum has seen plenty of these effects play out in 2025, mostly the reverse version with crypto prices going down amid a slower rate-cut policy.

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But this was the bullish version of the rate-cut effect. Powell didn't actually lower federal interest rates in Friday's speech at Jackson Hole, Wyoming, but he suggested that September's Federal Reserve meeting "may warrant" the first interest rate reduction since last December.

The mere suggestion that rates might come down was enough to boost Ethereum's swooning price chart.

Image source: Getty Images.

Can Ethereum maintain this momentum?

Ethereum ended 2024 near a multiyear high but backed down as much as 63% from that peak by mid-April 2025. The cryptocurrency is quite sensitive to macroeconomic changes and quite volatile in general, with a beta value of 4.7 today. That means Ethereum tends to move in the same direction as the S&P 500 (SNPINDEX: ^GSPC) stock market index, but 4.7 times faster in either direction. By comparison, Bitcoin's beta is a calmer (but still elevated) 2.8.

Will Ethereum maintain its momentum from here? It's hard to say because there are many moving pieces to this puzzle. Will the Fed actually lower rates in September, or will spiking inflation force a different decision? Can the recent trend of companies adding Ethereum to their balance sheets pick up speed? Are consumers around the world ready to embrace Ethereum-based solutions for decentralized finance and blockchain-powered games?

The answers to some of these questions probably won't be favorable to Ethereum investors this year. However, I expect this cryptocurrency to disconnect from its tight macro trend reliance over time and become more valuable in the long run. So whether the Jackson Hole spike has legs or not, I'm a happy long-term investor in Ethereum coins. Just fasten your digital seat belts, because there may be some turbulence in the months ahead.

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Anders Bylund has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.