From the Surge in Gold to the Plunge in Bitcoin: Powell's Speech Tonight May Reshape Global Risk Sentiment

At 00:20 Beijing time on Wednesday morning, Federal Reserve Chair Powell will deliver a speech at an event hosted by the National Association for Business Economics, titled "Economic Outlook and Monetary Policy."

This speech comes amid heightened volatility in global markets due to renewed trade tensions and a sharp correction in the digital asset market. Powell’s remarks could influence market expectations regarding the pace of interest rate cuts and overall monetary policy, thereby determining whether the current downward trend in the cryptocurrency market deepens or stabilizes.

Last week, U.S. President Trump reignited trade frictions with a tariff threat, sending shockwaves through global markets—total market capitalization of cryptocurrencies plummeted by over $125 billion within hours. Bitcoin, which had once surged above $126,000, quickly collapsed below $105,000 following Trump's tariff announcement and even briefly fell below $102,000 last Saturday.

During the same period, Ethereum fell nearly 20%, while Solana (SOL), Ripple (XRP), and Binance Coin (BNB) recorded declines ranging from 12% to 18%.

This sharp decline triggered widespread forced liquidations across the network. Data from CoinGlass showed that over 1.66 million traders were liquidated within 24 hours, with total liquidation positions reaching $19.33 billion. Among these, liquidations for Bitcoin and Ethereum alone amounted to nearly $10 billion, marking one of the most severe deleveraging events of the year.

Meanwhile, the Crypto Fear & Greed Index plunged from 64 ('greed') on Friday to 27 ('fear') on Saturday, its lowest level in the past six months.

Blockchain data firm Santiment noted that the sell-off on Friday was not solely driven by the tariff news. While retail traders quickly attributed the crash to the tariff standoff, deeper structural issues had been building up, including excessive leverage and extreme concentration of long positions.

Analysts at The Kobeissi Letter shared a similar view, calling it a 'forced unwind' event in a crowded market, where the market was previously heavily skewed toward long positions.

Powell’s speech may set the tone for the path of interest rate cuts.

Analysts believe that Powell's upcoming speech will be pivotal for market direction. Investors are closely watching whether he will provide clues regarding the timing and magnitude of interest rate cuts.

The market broadly anticipates that the Federal Reserve will cut interest rates by 25 basis points in both October and December, with probabilities reflected in futures markets at 97% and 89%, respectively.

Powell’s speech on Tuesday local time is expected to clarify the central bank’s views on inflation, growth, and the impact of tariffs. His tone will determine whether market confidence rebounds or deteriorates further.

If Powell adopts a more hawkish tone—indicating that interest rates will remain higher for a prolonged period—cryptocurrencies and the U.S. stock market may face renewed selling pressure. These asset classes have become increasingly correlated with overall risk sentiment.

Although the market rebounded slightly on Monday, the recovery remains fragile. The rebound was driven by more moderate trade signals released by Trump and Vice President Vance over the weekend. Nevertheless, tensions persist.

Meanwhile, the commodities market continues to show strong gains as investors flock to safe-haven assets. Both gold and silver have reached new all-time highs.

Bank of America has raised its 2026 gold price forecast to $5,000, citing ongoing geopolitical risks, robust central bank gold purchases, and heightened market expectations for Federal Reserve interest rate cuts.

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