Bitcoin saw a notable rebound on Friday, climbing around 4% to trade near $116,834, after U.S. Federal Reserve Chair Jerome Powell hinted at a possible interest rate cut in September. Speaking at the Jackson Hole Economic Symposium, Powell took a more cautious tone than the markets had anticipated. He expressed concerns about the labor market and signaled that risks to employment were increasing. These statements quickly shifted investor expectations.

Prior to Powell’s speech, market sentiment leaned toward a stable rate environment, with around a 69% chance of a rate cut being priced in for September. However, following his remarks, expectations rose sharply, with analysts now assigning nearly a 90% probability to a rate reduction next month, according to the CME FedWatch tool.

The broader financial markets reacted swiftly. In addition to the spike in Bitcoin, Ether also recovered, jumping nearly 8% after suffering losses earlier in the week. U.S. stock markets turned positive, with the Nasdaq reversing part of a recent 3% dip. Bond markets responded too, as the yield on the 10-year U.S. Treasury fell to 4.27%, down six basis points. Gold prices also moved higher, while the U.S. dollar index slipped by 0.5%.

This week has been volatile across asset classes, with investors responding to every shift in tone from central bankers. Powell’s comments appear to have reassured markets that the Fed is aware of economic pressures and may take action if conditions continue to weaken. His more dovish tone marks a departure from recent messaging focused on inflation control, reflecting the complexity of managing growth and stability in a politically sensitive environment.

Looking ahead, the focus will now be on upcoming economic data releases and further Fed commentary. Investors are likely to continue adjusting their portfolios in response to policy expectations, creating opportunities and risks in equal measure.