Analysis of Bitcoin Price Volatility: Research on the Causes of the Rise on the Evening of August 22, 2025
I. Research Background and Core Findings
According to the latest market data, on the evening of August 22, 2025, Bitcoin prices showed a significant upward trend, starting to rise from a low point of around $114,170 that day, ultimately reaching around $115,860 after Federal Reserve Chairman Powell's speech, with a 24-hour increase of 2.27%. This price fluctuation is closely related to the market's expectations of a shift in Federal Reserve policy, and also reflects the deep linkage between the cryptocurrency market and the macroeconomic environment. This study reveals the key driving factors behind this price increase through multi-dimensional analysis and discusses its impact on the future trends of the cryptocurrency market.
Core Findings:
- Federal Reserve Chairman Powell's dovish remarks at the Jackson Hole Global Central Bank Annual Meeting are a direct catalyst for the rise in Bitcoin prices.
- Market expectations for the Federal Reserve to cut interest rates in September skyrocketed from less than 10% to 91.1%, directly influencing the pricing of risk assets.
- Bitcoin's price increase reflects its further consolidation as a macro asset and digital store of value.
- Continuous inflow of institutional investors and healthy on-chain data provide fundamental support for price increases.
- Policy movements related to stablecoins and global financial market reactions together create a favorable environment for the rise of Bitcoin prices.
II. Market Performance and Price Trend Analysis
2.1 Review of Bitcoin Price Trends
According to data from August 22, 2025, Bitcoin prices overall showed a trend of first declining and then rising. Earlier that day, Bitcoin prices slightly fell to around $114,170, with a narrow fluctuation range. Market sentiment also shifted from "greed" to "fear," and the fear and greed index dropped significantly. However, this calm situation underwent a significant change that evening.
On the evening of August 22, Beijing time, Bitcoin prices began to rise, starting from around $114,170 and ultimately reaching $115,860 after Powell's speech, with a 24-hour increase of 2.27%. This price fluctuation brought Bitcoin back to the recent trading range high, demonstrating the market's high sensitivity to changes in macroeconomic policy.
2.2 Overall Performance of the Cryptocurrency Market
Compared to Bitcoin, other major cryptocurrencies have shown stronger performance. Ethereum has increased by more than 7% in the past 24 hours, with its price rapidly rising from around $4,000 to over $4,600. This divergence reflects structural changes within the market and also indicates a difference in investors' risk preferences for different cryptocurrencies.
In addition, internal market performance shows divergence: new emerging projects continue to lead, with indications of capital positioning in high-potential new chains, while traditional large-cap altcoins are under significant pressure. This divergence trend indicates that even in an overall rising environment, market capital is strategically adjusting to seek investment opportunities with greater growth potential.
2.3 Market Sentiment and Capital Flows
Regarding market sentiment, the fear and greed index fell from "greed" to "fear," reflecting investors' cautious attitude towards the market outlook. However, after Federal Reserve Chairman Powell's speech, market sentiment quickly turned optimistic, leading to a rise in Bitcoin prices, indicating investors' high attention to changes in macroeconomic policy.
In terms of capital flows, Bitcoin spot ETFs experienced a net outflow of $312 million on August 21, but this trend eased on the evening of August 22. It is worth noting that although the spot ETF experienced capital outflows, the policy movements in the stablecoin sector have brought new hope. Reports indicate that the U.S. Treasury is discussing making stablecoin issuers buyers of short-term U.S. Treasury bonds, while rumors suggest that China is considering issuing a renminbi stablecoin, providing new potential funding channels for the market.
III. Federal Reserve Policy Shift and Changes in Market Expectations
3.1 Analysis of Powell's Jackson Hole Speech
Powell also pointed out in his speech that the Federal Reserve unanimously approved a new policy framework, adopting a flexible inflation target system and abolishing the inflation "compensation" strategy. If a tight labor market poses risks to price stability, preemptive action may be necessary. Regarding the impact of tariff policies on prices, Powell stated that the effects of tariffs on consumer prices are now visible, but these effects are expected to be one-time shocks.
3.2 Changes in Market Expectations and Reactions
On the evening of August 22, Beijing time, Federal Reserve Chairman Powell delivered a speech titled "Economic Outlook and Framework Review" at the Jackson Hole Global Central Bank Annual Meeting, releasing significant signals. Powell stated, "The current situation indicates that the downside risks to employment are increasing. The balance of risks has shifted, which may require an adjustment in policy stance." This statement was widely interpreted by the market as a signal that the Federal Reserve may soon begin a rate cut cycle.
This change in expectations was quickly reflected in the prices of various assets. All three major U.S. stock indices rose by more than 1%, Chinese assets strengthened across the board, and the Nasdaq Golden Dragon China Index rose by 2%, while the double long CSI 300 ETF surged more than 6%. The cryptocurrency market also surged, with significant price increases for mainstream cryptocurrencies like Bitcoin and Ethereum.
3.3 Long-Term Impact of Policy Framework Adjustments
Powell's speech not only affected short-term market expectations but also marked an important adjustment in the Federal Reserve's policy framework. The Federal Reserve released a revised (Statement of Long-Term Goals and Monetary Policy Strategy), with key points including the cancellation of the "average inflation targeting" and a return to flexible inflation targeting. This adjustment indicates that the Federal Reserve will pay more attention to labor market risks rather than just inflation data.
For the cryptocurrency market, this policy shift means that a more accommodative monetary environment may be faced in the coming months, which is generally favorable for the performance of risk assets. Historical data shows that in the early stages of the Federal Reserve's interest rate cut cycle, risk assets like Bitcoin often perform well, as investors seek higher-yielding assets to hedge against currency depreciation risks.
IV. Multi-Dimensional Driving Factors of Bitcoin Price Increase
4.1 Changes in the Macroeconomic Environment
Changes in the macroeconomic environment are important factors driving the rise in Bitcoin prices. Powell mentioned in his speech that the U.S. economy still shows resilience despite high tariffs and tightened immigration policies, but the labor market and economic growth have significantly slowed down. This scenario of economic growth slowing down but not yet falling into recession, known as a "soft landing," is usually favorable for the performance of risk assets like Bitcoin.
Additionally, the US dollar index plummeted sharply after Powell's speech, falling below the 98 mark, closing at 97.8371 as of 10:40 PM Beijing time, with a daily drop of 0.82%. A weaker dollar is generally favorable for dollar-denominated assets, including Bitcoin and precious metals like gold. Meanwhile, spot gold prices also increased, breaking through $3,370 per ounce during the session, indicating that investors are seeking diversified asset allocations to cope with potential currency depreciation risks.
4.2 Increased Participation of Institutional Investors
The continued participation of institutional investors is an important foundation supporting Bitcoin prices. According to the latest data, the non-liquid supply of Bitcoin has reached a historical peak, indicating that the current Bitcoin price surge is not driven by retail frenzy, but rather by multiple structural forces working together, including institutional fund inflows, historical supply constraints, and improvements in the macroeconomic environment.
One important channel for institutional fund inflows is the Bitcoin spot ETF. Although there was a net outflow of $312 million on August 21, overall, the Bitcoin spot ETF still attracted a significant amount of capital. This inflow of funds indicates that the recognition of Bitcoin as an asset class by institutional investors is increasing.
It is noteworthy that even in the context of Moody's downgrading the US credit rating and a risk-averse sentiment in the stock market, Bitcoin was still able to achieve an increase recently, further reinforcing its role as a store of value. This narrative is gaining more consensus and is expected to become a long-term positive catalyst.
4.3 Improvement of the Regulatory Environment and Policy Support
The improvement of the regulatory environment is another important factor driving the rise in Bitcoin prices. The progress made by the United States in stablecoin legislation provides a clearer regulatory framework for the cryptocurrency market, reducing uncertainty. On May 19, local time, the U.S. Senate formally passed a procedural vote on the (GENIUS Stablecoin Act) with a vote of 66 to 32, aimed at regulating the currently nearly $250 billion stablecoin market.
In addition, Hong Kong's stablecoin regulatory bill has also been passed ahead of the United States. On May 21, 2025, the Hong Kong Legislative Council officially passed the (Stablecoin Regulation Bill), establishing a clear regulatory framework for stablecoin issuance. These regulatory advancements provide a more stable legal environment for the cryptocurrency market, helping to attract more traditional financial institutions into the market.
The Trump administration's friendly attitude towards cryptocurrencies is also an important factor. Trump has repeatedly stated that he wants to make the United States a leading country in global cryptocurrencies and Bitcoin, and plans to establish a presidential advisory committee on Bitcoin and cryptocurrencies to formulate transparent regulatory policies, providing investors with a stable regulatory environment. This political support provides additional confidence to the market.
4.4 On-Chain Data and Market Structure Health
On-chain data shows that the overall structure of the Bitcoin market is healthy. According to Glassnode data, the non-liquid supply of Bitcoin has reached a historical peak, indicating that long-term holders are optimistic about the market outlook and are willing to continue holding rather than selling. Additionally, trading activity remains strong, with an average of about 735,000 active addresses and 390,000 to 400,000 daily transactions over the past 30 days, with an NVT golden cross of 1.51, indicating that BTC/USD valuation has real usage support.
In terms of network computing power, the Bitcoin network's computing power exceeds 1ZH/s, reflecting the network's security and miners' continued investment. Miners' daily income is about $39 million, although it has decreased by about 30% year-on-year, it still remains at a reasonable level. This data indicates that the Bitcoin network's infrastructure remains robust, providing technical support for price increases.
4.5 Market Sentiment and Psychological Factors
Market sentiment and psychological factors play an important role in Bitcoin price volatility. Bitcoin price fluctuations are largely influenced by market sentiment, and investors' panic and greed emotions can lead to sharp price swings. On the evening of August 22, 2025, market sentiment shifted rapidly from "fear" to "greed," driving up Bitcoin prices.
In addition, market expectations for Federal Reserve interest rate cuts also affect investors' psychological expectations. Rate cuts usually lead to a decline in yields on traditional assets, prompting investors to seek higher-yielding assets, including Bitcoin. This shift in psychological expectations, coupled with the policy certainty brought by Powell's speech, jointly drove up Bitcoin prices.
V. Historical Comparison and Future Outlook
5.1 Comparative Analysis with Historical Price Volatility
Comparing Bitcoin's historical price volatility, it can be found that this rise is similar to past performance during periods of Federal Reserve policy shifts. For example, when the Federal Reserve hinted at an accommodative policy in 2019, Bitcoin prices also showed a significant rise. This indicates that the Bitcoin market has gradually matured and is beginning to react more rationally to changes in macroeconomic policies.
However, unlike in the past, the current Bitcoin market shows a significantly increased level of institutional participation. According to the latest data, the inflow of funds into Bitcoin ETFs has become an important support force for the market. Additionally, large-scale purchases by corporate treasuries have also pushed Bitcoin prices up by 23% so far this year. These structural changes indicate that the Bitcoin market is shifting from being dominated by retail investors to being led by institutions, which may reduce extreme price fluctuations in the future.
5.2 Institutional Predictions and Price Targets
Several institutions have made predictions about the future price trends of Bitcoin. VanEck analysts foresee Bitcoin reaching $180,000 in 2025, although there may be a correction of up to 30% within the year. Edward Carroll from MHC Digital Group predicts that the BTC price could reach $160,000 by the end of 2025 and even $1 million by 2030. HashKey Group's chief analyst Ding Zhaofei believes that Bitcoin will reach $150,000 to $180,000 in 2025.
Pantera Capital CEO predicts that the Bitcoin bull cycle will peak in August 2025. The last halving occurred in April 2024, and Mohrhead predicts based on historical trends that Bitcoin will reach its cycle peak in August 2025. Now, Mohrhead is confident in his prediction that Bitcoin will reach $117,000 in August 2025.
5.3 Risk Factors and Investment Recommendations
Although there are many factors driving the rise in Bitcoin prices, investors still need to be aware of potential risks. Firstly, uncertainty regarding Federal Reserve policy still exists. Trump has recently intensified pressure on the Federal Reserve's decision-making body, even threatening to fire Federal Reserve Governor Lisa Cook. This political intervention could lead to instability in monetary policy, thereby affecting market expectations.
Secondly, market volatility remains high. Bitcoin prices may experience significant fluctuations in the short term, and investors need to have sufficient risk tolerance. For example, during a critical moment of Bitcoin's high volatility, a mysterious whale opened a super short position of $365 million at the $84,040 level, with a leverage ratio as high as 40 times.
For investors, it is recommended to closely monitor the Federal Reserve's policy direction, global economic data, and regulatory changes in the cryptocurrency market. At the same time, a diversified investment strategy should be adopted to avoid concentrating too much capital in a single asset. Finally, it is important to remain rational and avoid blindly following trends, making reasonable decisions based on individual risk tolerance and investment goals.
VI. Conclusion and Insights
The reasons for last night's rise, AI's answer
The rise in Bitcoin prices on the evening of August 22, 2025, is the result of multiple factors working together. Federal Reserve Chairman Powell's dovish speech signaled a shift in policy, quickly adjusting market expectations and driving up the prices of risk assets, including Bitcoin. Continued participation of institutional investors, improvement of the regulatory environment, healthy market structure, and positive market sentiment together create a favorable environment for Bitcoin price increases.
This event also provides important insights for investors: firstly, the Bitcoin market has gradually matured and is beginning to react more rationally to changes in macroeconomic policies; secondly, institutional participation is becoming the dominant force in the market, which may reduce extreme price fluctuations in the future; lastly, the improvement of the regulatory environment is crucial for the long-term healthy development of the market.
Looking ahead, the Bitcoin market will continue to be influenced by various factors such as the macroeconomic environment, policy changes, technological developments, and market sentiment. Investors need to stay vigilant and closely monitor changes in various influencing factors to make informed investment decisions. At the same time, regulatory agencies also need to continue improving the regulatory framework to provide clearer guidance for the market and promote the healthy development of the cryptocurrency market.
