Ether Hits Four-Year High as Fed’s Powell Sparks Risk-On Rally

Economic

Summary:

Ether surged 15% to $4,885 on August 22, surpassing its 2021 record, after Fed Chair Jerome Powell signaled possible rate cuts, reigniting investor appetite for risk assets...

Powell’s remarks and the return of risk appetite

The immediate catalyst for Ether’s rally came from Jerome Powell’s Jackson Hole speech, where he noted that “shifts in the balance of risks may warrant policy adjustments.” Markets interpreted this as a clear opening for interest rate cuts as soon as September. The causal link is direct: lower rates reduce the opportunity cost of holding non-yielding assets such as cryptocurrencies, while also encouraging investors to reallocate cash into higher-risk, higher-return vehicles. Bitcoin gained 4% to $117,008, reinforcing the broader digital asset uptrend.

Ether closed at $4,885, overtaking its November 2021 peak of $4,866. This new high reflects not only favorable macro momentum but also structural growth in Ethereum’s ecosystem. Stablecoins, now accounting for 40% of blockchain transaction fees, are more than half built on Ethereum, highlighting its foundational role in digital payments. The correlation is strong: as stablecoin adoption rises, Ethereum benefits from higher network activity, fee generation, and institutional credibility.

Market reactions across equities

Crypto-related equities surged in parallel. Bitmine Immersion and SharpLink Gaming rose 12% and 15% respectively, erasing prior weekly losses. DeFi Development, focused on Solana assets, jumped 21%, while Coinbase and Strategy gained 6%. The exception was ETHzilla, backed by Peter Thiel, which fell over 31% after announcing a massive share sale despite favorable macro conditions. This divergence shows that while crypto sentiment is broadly bullish, company-specific financing decisions can outweigh sector-wide momentum.

Fundstrat’s Tom Lee compared stablecoins’ impact on digital assets to ChatGPT’s effect on AI, calling Ether “the biggest macro trade of the next 10–15 years.” His argument underscores a causal relationship: regulatory advances such as the GENIUS Act and the SEC’s Crypto Project are legitimizing blockchain infrastructure, accelerating Wall Street adoption. As institutions embrace stablecoins for efficiency and compliance, Ethereum stands as the key beneficiary.

Ether’s record-breaking rally illustrates how macroeconomic shifts and structural blockchain adoption reinforce one another. While Powell’s comments triggered the immediate surge, the deeper driver is Ethereum’s growing role as the backbone of the digital financial system. If current trends continue, Ether may not just mirror Bitcoin’s trajectory but set the pace for the next phase of crypto’s institutionalization.

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From property pessimism to stock market frenzy

Chinese retail investors, long known for their preference for real estate, are redirecting capital into equities as property prices continue to slide. Official data shows households now hold nearly 162 trillion yuan ($22.5 trillion) in cash savings, double the level in 2020. The shift reflects a causal dynamic: collapsing property confidence is pushing investors to seek returns elsewhere, and the stock market has emerged as the primary alternative.

The Shanghai Composite has climbed about 13% year-to-date, while the CSI 300 is up 10%. The surge is even more pronounced in Hong Kong, where the Hang Seng has soared 30% since January, powered by a record $90 billion in inflows from mainland investors in the first half of 2025. Analysts attribute the initial momentum to the buzz around China’s AI model DeepSeek R-1, which triggered speculative buying. However, valuations remain relatively low, with market capitalization-to-GDP and household savings ratios still beneath historical averages, suggesting room for further gains.

FOMO outweighs macroeconomic weakness

Despite the rally, China’s economy continues to flash warning signs. Property values dropped again in July, retail sales grew only 3.7% year-on-year the weakest pace this year and deflationary pressure persists. Trade tensions with the U.S. further complicate the outlook. Yet analysts like Rory Green of GlobalData.TS Lombard emphasize that investor psychology is driving markets: the fear of missing out (FOMO) is outweighing traditional macro fundamentals. The correlation is clear optimism in equities serves less as an economic barometer and more as a reflection of retail investor sentiment.

Beijing has pledged to intervene to curb deflation and stabilize prices, signaling official support for markets. Still, risks remain: failure in U.S.-China trade talks, underwhelming stimulus, or prolonged deflation could easily derail sentiment-driven rallies. Past Chinese bull markets have been characterized by sharp, fast-moving gains followed by equally abrupt corrections, reinforcing the view that volatility is intrinsic to a retail-dominated market.

China’s stock market boom reveals both opportunity and fragility: a vast reservoir of untapped household savings and speculative enthusiasm can fuel rallies, but structural weaknesses in property and consumption remain unresolved. For now, sentiment dominates economics, and FOMO is proving to be the most powerful force in Chinese finance.

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Russia-Ukraine Conflict

Symbolism of the Washington meeting

On August 18, European leaders including Germany’s Friedrich Merz, France’s Emmanuel Macron, and the UK’s Keir Starmer gathered in the Oval Office alongside Ukraine’s Volodymyr Zelensky to meet U.S. President Donald Trump. Rather than projecting a united front of equal partners, the scene revealed Europe’s structural dependence on U.S. decision-making. Analysts noted the timing: just days earlier, Trump had met Vladimir Putin in Alaska, raising fears in Europe that he might unilaterally negotiate a deal sacrificing Ukrainian interests. The causal relationship here is clear Europe’s lack of independent security capacity forces its leaders to preemptively manage U.S. unpredictability, rather than shape outcomes directly.

For years, figures like President Macron have promoted the concept of European “strategic autonomy.” Yet the Washington trip illustrated how little progress has been made. The EU lacks sufficient weapons stockpiles, coordinated political will, and unified diplomacy to act independently. While Europe has increased aid to Kyiv since 2022, its efforts remain secondary in scale and impact compared to U.S. support. Germany’s historic defense spending increase has not yet translated into immediate deterrent power. The correlation is evident: without U.S. military backing, NATO’s capacity is perceived as hollow, leaving Europe unable to provide credible security guarantees to Ukraine.

Trump’s leverage and European hesitation

This imbalance grants Trump enormous leverage. He can threaten tariffs, belittle allies, or engage directly with Moscow, yet European leaders avoid direct confrontation for fear of undermining U.S. security commitments. Reports that Trump and Putin may have privately discussed “territorial exchanges” in eastern Ukraine illustrate the stakes. Although Europe insists borders cannot be changed by force, leaders avoided openly challenging Trump, who deflected by saying that territorial issues were “Ukraine’s problem.” This dynamic reveals a causal vulnerability: because Europe cannot enforce red lines without Washington, it tolerates ambiguity even on issues central to its stated principles.

The episode demonstrates that Europe’s security architecture remains anchored not in collective European capacity, but in the political will of a single American president. This dependence undermines long-term strategic credibility and highlights the gap between rhetoric and reality. Unless Europe invests in independent defense capabilities and builds cohesive political mechanisms, “strategic autonomy” will remain a slogan rather than a policy.

The Washington visit did not just confirm Europe’s loyalty to Ukraine it exposed the bloc’s inability to shape outcomes without U.S. involvement. In the Ukraine war, as in broader global security, Europe’s fate continues to rest less on its own institutions than on decisions taken in the Oval Office.

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Musalem’s cautious message

Speaking to Reuters on August 22, Alberto Musalem stated he has not yet decided whether to back a rate cut at the Fed’s September 16–17 meeting. While markets interpreted Jerome Powell’s earlier remarks at Jackson Hole as a green light for easing, Musalem cautioned that inflation remains closer to 3% than 2% and could persist above target for longer than expected. He stressed that, while risks to the labor market are not yet evident, inflation overshoot remains the more pressing concern at present. This indicates a causal trade-off: easing too soon could entrench elevated inflation, while waiting too long risks labor market deterioration.

Powell acknowledged that tariffs may drive short-term inflation but argued that weakening labor market dynamics pose growing risks. Markets seized on this as a sign of imminent easing, with futures pricing in a high probability of a 0.25 percentage point cut in September. Musalem, however, emphasized the conditionality of Powell’s words, noting that the possibility of cuts should not be mistaken for a guarantee. His stance reflects an internal Fed divergence some members prioritize guarding against inflation persistence, while others focus on cushioning labor market fragility.

Data-dependent outlook

Musalem made clear he will not finalize his decision until two to three days before the September meeting, after assessing key data releases. August employment figures, along with upcoming inflation reports, will be pivotal in shaping the balance of risks. If evidence emerges of labor market softening, he suggested policy would need to adjust. Otherwise, maintaining current restrictive levels may be warranted. The correlation here is direct: weaker employment data strengthens the case for cuts, while stable hiring reinforces holding rates steady.

Musalem also noted that fiscal, trade, and immigration policies are now more predictable, which reduces some uncertainty for the Fed. Still, the interaction between tariffs and inflation remains a central unknown. If tariffs only cause temporary price spikes, their impact on long-term inflation expectations may be limited. But if businesses pass on costs persistently, the inflation outlook could shift unfavorably.

While Powell’s Jackson Hole remarks fueled Wall Street optimism, Musalem’s caution underscores that September is only part of a longer policy journey. The Fed remains data-driven, and the decision to cut rates hinges on whether inflation convincingly trends lower without eroding labor market stability. For investors, the message is clear: rate relief may come, but it will not be rushed.

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A structured national plan

According to Elavan Ladpakdee of the Lao Durian Business Group, Laos currently has 269 hectares of durian plantations with nearly 19,000 trees. Of these, 3,312 trees are already bearing fruit, while over 15,000 are approaching harvest stage. To reach its production goal, Laos is investing in training programs focused on cultivation techniques, orchard management, pest control, and value-added processing. The causal link is clear: improved farming practices and export-readiness directly enhance product quality, helping Laos enter competitive export markets.

China is expected to be the largest buyer of Lao durians, given the country’s proximity and the efficiency of the Laos-China Railway. This infrastructure lowers transport costs and reduces delivery times, providing a logistical edge over some regional rivals. The correlation between logistics development and export competitiveness here is evident better connectivity strengthens the attractiveness of Lao durians to Chinese buyers who already drive regional demand growth.

Competing in a crowded field

Southeast Asia’s durian export market is dominated by Thailand, Malaysia, and increasingly Vietnam. Cambodia has also entered the race, with its first shipments of fresh durians reaching China this year after securing approval from Beijing. Laos now seeks to join this competitive landscape, leveraging fertile land and skilled farmers to carve out a share of the lucrative Chinese market. The move signals that regional supply competition is intensifying, with smaller producers seeking to capitalize on rising demand.

Vietnam has long been one of China’s key durian suppliers, benefiting from proximity and favorable trade agreements. However, as Laos and Cambodia scale up production and gain export clearance, Vietnam may face downward price pressure and tighter competition. The causal relationship here lies in market dynamics: as more suppliers compete for Chinese contracts, established exporters must either differentiate on quality and branding or risk losing market share.

Laos’ “400-ton plan” reflects more than agricultural expansion it is a strategic attempt to enter one of Asia’s fastest-growing fruit export markets. By combining improved cultivation, value-added processing, and modern logistics, Laos positions itself to compete directly with regional heavyweights. For Vietnam and its neighbors, the message is clear: the race for China’s durian market is accelerating, and only those who adapt quickly will retain their competitive edge.

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Strategic realignment under tariff pressure

The Trump administration’s tariff hikes 50% on Brazilian exports, 25% on Indian goods, and threats of further measures have accelerated BRICS’ efforts to reshape global trade patterns. Analysts note a clear causal link: punitive tariffs meant to weaken BRICS economies are instead pushing members to diversify partnerships and reinforce their collective autonomy. For instance, China swiftly replaced U.S. soybean imports with Brazilian supplies, underscoring how trade realignment can mitigate U.S. leverage while redirecting benefits to fellow BRICS states.

Russia and India are advancing a comprehensive strategic partnership, with Moscow remaining New Delhi’s top supplier of oil, refined products, and coal. Plans are underway to expand liquefied natural gas exports and to integrate India into new trade corridors such as the Northern Sea Route and the International North-South Transport Corridor. Industrial collaboration, including a joint high-speed rail project under India’s “Make in India” initiative, illustrates how tariff-driven disruption correlates with accelerated bilateral cooperation. The results are tangible: bilateral trade has multiplied sevenfold in five years, elevating India into Russia’s top three trading partners.

Internal cohesion within BRICS

Despite past tensions, members are showing renewed solidarity. China and India, after years of strained border relations, are reviving direct flights, trade initiatives, and joint border management mechanisms following Chinese Foreign Minister Wang Yi’s recent visit to New Delhi. Meanwhile, Prime Minister Modi’s calls with Presidents Putin and Lula da Silva reaffirm coordinated responses to U.S. tariffs. These interactions demonstrate causation between external economic pressure and internal bloc cohesion, as BRICS states increasingly view strategic unity as essential for resilience.

With new members such as Egypt, Ethiopia, Indonesia, and the UAE, BRICS is evolving into a broader platform for the Global South. Former Chilean ambassador Jorge Heine calls this expansion “the most important geopolitical shift of 2022–2024,” reflecting the bloc’s rising influence. While critics argue BRICS risks irrelevance, the Rio Declaration reaffirmed members’ fundamental cohesion and shared objectives. Importantly, while Washington warns against de-dollarization, BRICS emphasizes the pragmatic use of national currencies and commodity barter, positioning itself not as a replacement for the U.S. dollar but as a complementary system to reduce dependency.

Strategic implications for global trade order

Rather than isolating BRICS, Washington’s tariff strategy risks consolidating the bloc’s determination to build multipolar trade frameworks. The correlation is evident: U.S. attempts at economic coercion are strengthening the appeal of alternative arrangements. Indian Foreign Minister S. Jaishankar’s comment that “Europe must shed the mindset that Europe’s problems are the world’s problems, but the world’s problems are not Europe’s problems” resonates across the Global South, encapsulating BRICS’ narrative of equitable globalization.

BRICS’ restructuring of trade ties under U.S. tariff pressure highlights a deeper trend: the emergence of an economic coalition determined to reduce reliance on Western-led systems. Instead of fragmenting under external stress, the bloc is leveraging adversity to accelerate its push for a multipolar and more balanced global order.

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Emergency support for affected exporters

On August 22, Brazil’s National Bank for Economic and Social Development (BNDES) unveiled a new 10 billion real ($1.85 billion) credit package. The move directly responds to Washington’s decision earlier this month to impose a 50% tariff on Brazilian imports, covering nearly 700 product categories and affecting about 44% of Brazil’s 2024 exports. The causal link is immediate: tariffs reduce Brazilian firms’ competitiveness in the U.S. market, triggering sudden revenue declines and threatening export viability.

This credit line supplements the government’s broader “Brazilian Sovereignty” program, which allocates 40 billion real ($7.4 billion) in financing. Of this, 30 billion real ($5.55 billion) comes from the Export Guarantee Fund (FGE), while 10 billion real originates from BNDES itself. The funds are designed to provide working capital, support investments in innovation, finance new machinery, and help companies expand into alternative markets beyond the U.S.

Conditions and mechanisms of support

The program sets specific eligibility rules. Firms that experienced an abrupt loss of export capacity and a revenue drop of at least 5% will gain priority access. Additionally, 22.5 billion real ($4.17 billion) will be channeled into loan guarantees for micro, small, and medium-sized enterprises. Companies must commit to maintaining their average workforce before and after receiving credit, with a four-month grace period on repayments. This condition links financial aid to employment protection, ensuring social as well as economic stabilization.

BNDES President Aloizio Mercadante likened the economic shock from the U.S. “super tariff” to crises such as the COVID-19 pandemic and recent environmental disasters in Rio Grande do Sul. However, he stressed that the difference lies in the nationwide scope of the impact, with export revenues severely hit across multiple sectors. Brazil’s Ministry of Finance confirmed that the tariffs pose a systemic risk by targeting a wide range of goods central to Brazil’s export portfolio.

Strategic implications

The credit initiative reflects Brazil’s strategy of cushioning exporters while simultaneously encouraging market diversification. By financing innovation and expansion into new regions, Brasília aims to reduce its dependency on the U.S. market over time. At the same time, by tying access to employment guarantees, the government underscores a dual objective: protecting domestic jobs while sustaining foreign trade revenues.

Brazil’s swift deployment of emergency credit demonstrates both the severity of the U.S. tariff shock and the country’s determination to shield its export sector. While the program can alleviate immediate liquidity strains, long-term resilience will depend on whether Brazil can reorient its trade flows and secure greater autonomy from U.S. market volatility.

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