Bitcoin (BTC) bounced off the $111,800 support level on Friday, sharply rising by 2.6% to $114,800 after Federal Reserve chairman Jerome Powell hinted at potential rate cuts during a speech at Jackson Hole.

The swift move, preceded by a sell-off leading up to the speech, resulted in the liquidation of more than $375 million worth of crypto derivatives positions, according to CoinGlass. The majority of those losses are attributed to traders holding short positions.

Ether (ETH) positions were the hardest hit, with $150 million liquidated over the past four hours as the price rose from $4,200 to $4,650, marking a 10% gain.

Bitcoin's level of support was critical as it was a record high set in May. The bounce indicates a bullish reversal following a one-week downtrend from $124,500.

Despite fears that Powell's speech would have a hawkish tone, he said "the downside risks to employment are rising," and "If those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment."

The comments suggest rate cuts could be on the table next month, which would directly benefit risk assets like bitcoin and ether.

The market remains volatile following the speech, with BTC pulling back slightly from $115,700 to $114,800. While liquidations have taken derivatives positions out of the market, open interest has risen to its highest point in four days, suggesting that the bounce is also being backed by leverage, according to Coinalyze.

The altcoin market is lagging behind ether with the exception of lido (LDO) and ethena (ENA), which are both continuing their upside ascent after the SEC clarified rules around staking earlier this month.

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