Powell hints easing as markets rebound, crypto leads gains

Federal Reserve Chair Jerome Powell's remarks at the Jackson Hole Economic Symposium on Friday reignited swings across markets, sharpening focus on rate expectations and prompting a notable rebound in cryptocurrencies and related stocks after a week of defensive positioning. Traders had entered the conference pricing in a high probability of a September rate cut, and Powell's hint that the balance of risks may warrant "adjusting our policy stance" helped send risk assets higher while leaving the outlook for future Fed action contingent on incoming data.

In the run up to the speech, options markets signaled caution. Market data showed heavy volume and open interest clustered around Bitcoin option strikes at 110,000 and 120,000, and measures of implied volatility rose modestly, suggesting traders were bracing for a roughly 2 percent move in Bitcoin around the event. Pulkit Goyal, head of trading at crypto market maker Orbit Markets, said options were pricing in about a 2.0 move, and that downside protection had been in demand ahead of the remarks. James Toledano, chief operating officer at Unity Wallet, said volatility positioning was likely to stay defensive through the speech,...