Ethereum Nears $5K as Powell Ignites Risk Rally; Bitcoin May Follow With New Peak, Analysts Say

Powell’s Dovish Pivot Ignites Crypto Surge: Ether Nears $5K, Bitcoin Eyes Record Territory

August 23, 2026 — Major cryptocurrencies soared Friday after Federal Reserve Chair Jerome Powell surprised markets with a dovish speech at the Jackson Hole economic symposium, bolstering bets on a September interest rate cut and setting the stage for new all-time highs in digital assets.

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Fed Turns Supportive as Economic Risks Mount

Powell signaled that downside risks to the U.S. labor market are rising, suggesting that the central bank is preparing to ease its policy stance. The benchmark interest rate has remained at 4.25% for eight consecutive months.

“Policy is restrictive, and evolving risks may warrant a shift,” Powell said, noting that Trump-era tariffs may only have a short-term inflationary effect.

Markets responded quickly. The probability of a September rate cut jumped to 90%, sending stocks and crypto sharply higher by the end of the trading week.

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Ethereum Breaks Out to Record Highs

Ethereum (ETH) led the crypto rally, surging to a new record of $4,885 on Coinbase before settling around $4,700. The token gained nearly 15% in 24 hours, far outpacing Bitcoin’s more modest 4% climb.

“We see a clear runway to $5,000+ for ETH in the near term,” said Sam Gaer, CIO at Monarq Asset Management. “Market signals are healthy, and we’re seeing strong demand from institutional treasury allocations.”

Options activity supports the bullish view, with Deribit data showing increased demand for ETH call options across all maturities. In contrast, BTC derivatives remain relatively muted.

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Bitcoin Holds Steady With Institutional Backing

Despite ETH’s lead, Bitcoin (BTC) remains strong. It traded near $115,600, off a high of $117,400, and is showing signs of renewed accumulation among large holders.

“BTC’s recent 9.6% pullback was shallow compared to previous dips, and whale activity around $113K confirms ongoing demand,” Gaer noted.

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Analysts See Extended Rally Into Year-End

Spencer Yang, managing partner at BlockSpaceForce, believes Friday’s rally is just the beginning.

“We expect this September rate cut to be the first of many,” Yang said. “Key assets like BTC, ETH, BNB, SOL, and LINK are positioned to lead gains across their respective sectors.”

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Spot ETF Flows in Focus

While Powell’s comments brought short-term relief, market participants say follow-through will depend heavily on spot ETF flows in the coming days.

“The key test is ETF activity on Friday and Monday,” said Steve Lee, co-founder of Neoclassic Capital. “Sustained inflows could push BTC and ETH to new highs in the coming weeks.”

Lee also highlighted several emerging blockchain projects — including Monad, Base, Story, and SUI — as part of his firm’s early-stage portfolio watchlist.

Meanwhile, Gaer emphasized strong momentum in the Solana ecosystem, pointing to JITO, JUP, Raydium, and PUMP as high-beta plays with both technical and fundamental strength.

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Risks Still Lurk Behind the Rally

Despite the bullish setup, analysts warn of potential headwinds, especially around corporate crypto adoption and equity market volatility.

“We’re starting to see cracks in the structure of Digital Asset Treasuries,” Lee cautioned. “Some recent deals show weak compliance and loose governance, which raises red flags.”

Corporate adoption of crypto has grown significantly since 2020. More than 100 public firms now hold nearly 985,000 BTC, according to Bitcoin Treasuries. But as more companies onboard, the risks around execution and market impact increase.

“The trend is real, but it’s not without friction,” Lee added.

Gaer echoed the concerns, noting that overheated equities and unexpected macro or geopolitical shocks could easily derail current momentum.