Dovish Fed Hints, Surging ETF Flows Buoy Crypto Markets

Cryptocurrencies surged ahead on Friday as global markets cheered the dovish comments from a Fed official that spotlighted the potentially disinflationary trends in the U.S. economy. The repricing of Fed rate hike expectations, the easing in bond yields, the massive inflows to U.S.-listed Bitcoin and Ethereum Spot ETF products as well as the heavy liquidation of crypto short positions catalyzed an emphatic rally in the cryptocurrency markets.

Overall cryptocurrency market capitalization has jumped more than 4 percent overnight to $2.73 trillion. Bitcoin touched a high of $82,262 and Ethereum rose to a high of $2,545.62 during the past 24 hours.

Recent comments from Fed Governor Waller about giving disinflation a chance, reverberated in global markets, resulting in a repricing of Fed rate hike expectations. Governor Waller's comments about raising rates if inflation comes in hotter than expected, meanwhile put the market's spotlight on the inflation data for August due next week. Annual headline inflation stood at 3.4 percent in July, declining from 3.5 percent in June and 4.2 percent in May. The core inflation rate, excluding volatile food and fuel costs stood at 2.5 percent in July, declining from 2.6 percent in June and 2.9 percent in May.