Bitcoin Surges 7.5% to $66,250, Eyeing Global Rate Cuts

On Wednesday, Bitcoin surged over 7.5% to a new price of $66,250, marking its best performance since March 20. This rally coincided with releasing weaker-than-expected US economic data, reinforcing the likelihood of a Federal Reserve rate cut in September. Additionally, the Bank of England and the European Central Bank plan to reduce rates as early as June.

The same day, the US Labor Department reported that April’s Consumer Price Index (CPI) showed a smaller increase than anticipated, rising by just 0.3% in both headline and core figures. This decreased from March’s CPI figures and indicated a shift towards lower living costs, further influencing the market’s anticipation of rate cuts.

April CPI Rises Just 0.3%, Signaling Weaker Inflation

Market indicators such as Fed funds futures suggest traders expect the Federal Reserve to initiate a 25 basis point rate reduction by September. This sentiment stands close to the Fed’s signals of slowing down its quantitative tightening measures starting in June.

In a broader perspective, financial markets are gearing up for rate cuts in the US and Europe, as the Bank of England and the European Central Bank will likely follow suit in June. This follows recent rate reductions by the Swiss National Bank and Sweden’s Riksbank.

Markets Expect 25bp Fed Rate Cut by September

Global central banks’ general move toward monetary easing looks positive for risk assets, including cryptocurrencies. This is evidenced by the MacroMicro chart, which has documented an uptick in central banks that are reducing their rates.

On Wednesday, the momentum continued as Bitcoin prices climbed 8%, reaching $66,442.31 by 4 p.m. EST, the highest value since late April. This surge began shortly before the US Labor Department announced the CPI-U increase.

Bank of England, ECB Set to Lower Rates in June

Investment advisor Brett Sifling highlighted how global investor response to the US CPI data and the anticipation of Federal Reserve actions contributed to the gains in risk assets. Meanwhile, Tim Enneking from Psalion pointed out that although the inflation report was a major catalyst, Bitcoin was oversold before the US CPI figures were released earlier that day.

Bitcoin’s 8% Gain to $66,442 Marks Wednesday’s High

The global central banks’ shift towards lowering rates has provided a buoyant backdrop for risk assets like cryptocurrencies. Weak US economic data primarily drove Bitcoin’s significant rise, setting the stage for potential Federal Reserve rate cuts come September. The downward trend in US CPI data further fuelled expectations for these cuts, while Bitcoin’s price ascent to its late April highs was catalyzed by optimistic market sentiment and conditions of being previously oversold.