Powell’s Rate Outlook Pushes Bitcoin, Ethereum Lower — Bounce Next?

Federal Reserve Chairman Jerome Powell’s latest testimony has sent ripples across the financial markets, including cryptocurrencies.

Bitcoin, Ethereum Weaken As US Yields Stay Elevated

During his Feb. 11 appearance at the House Banking Committee hearing, Powell reiterated that the central bank remains cautious about interest rate cuts, signaling that current monetary policy remains appropriate. His stance dampened investor optimism, triggering a selloff in risk assets, including Bitcoin (BTC) and Ethereum (ETH).

The Fed’s policy stance is now less restrictive, and the economy remains strong. However, Powell emphasized that monetary policy should not be adjusted urgently.

He warned that cutting rates too fast or too much could hinder progress on inflation while cutting rates too slowly or too little could weaken economic activity and employment.

Bitcoin briefly slipped below $96,000 following Powell’s remarks, marking a 2.35% decline in a day. Ethereum, which had already been on a downward trajectory, fell further, slipping below $2,600 briefly.

The broader crypto market also saw notable declines, with altcoins mirroring the weakness in BTC and ETH.

The market’s reaction to Powell’s speech was evident in the elevated short—and long-term Treasury bond yields. This made the opportunity cost of holding highly yielding assets more attractive than risk-on assets like Bitcoin and Ethereum.

The possibility of interest rates remaining the same at the Fed’s March 19 meeting now stands at a 95.50% chance compared to 75.50% a month ago, according to the CME FedWatch tool.

A rate cut is not fully priced in until September 2025, and fewer than two rate cuts are expected for the entire year.

Goldman Sachs Improves Bitcoin, Ethereum Fundamentals

Goldman Sachs increased its Ethereum ETF holdings by 2,000% in Q4 2024, raising its exposure from $22 million to $476 million. The bank primarily invested through BlackRock’s iShares Ethereum Trust and the Fidelity Ethereum Fund.

Additionally, Goldman boosted its Bitcoin ETF holdings by 114%, bringing its total exposure to $1.52 billion. The bank made major investments in the iShares Bitcoin Trust and the Fidelity Wise Origin Bitcoin Fund.

This increase in crypto ETF exposure coincided with a 41% rise in Bitcoin prices and a 26.3% rise in Ethereum prices during the same period.

Historically, Goldman Sachs has been critical of cryptocurrencies, with executives expressing skepticism about their viability as an asset class. However, this latest move signals a shift in sentiment and aligns with the broader trend of institutional adoption of digital assets.

Bitcoin, Ethereum Technical Analysis Today

Despite the downturn, technical indicators suggest that Bitcoin and Ethereum may be approaching a potential bounce.

BTC/USD Falling Wedge Pattern Analysis

Bitcoin is currently testing a key support confluence, which includes two ascending trendlines and the lower boundary of a falling wedge pattern.

Historically, falling wedge patterns signal bullish reversals once the price breaks above the upper trendline. If BTC confirms a breakout, it could rally toward its next resistance at $107,796.

Meanwhile, Bitcoin’s Relative Strength Index (RSI) hovers around 43.02, indicating that bearish momentum is weakening.

ETH/USD Eyes Sharp Bounce

Ethereum is trading near critical ascending trendline support, aligning with Fibonacci retracement levels.

Although ETH has formed a death cross—where the 50-day EMA crosses below the 200-day EMA—such patterns are often lagging indicators, meaning most of the downside may have already played out.

The RSI is also near oversold at 33.15, suggesting a possible relief rally. If Ethereum regains momentum and surpasses the $2,873-$3,099 zone, it could challenge resistance of around $3,100, aligning with the 50-day and 200-day EMA, as well as the 0.5 Fib line.