Bitcoin's price hit $60,000 today due to US PPI data and the Federal Reserve's interest rate cut by 50 basis points. Institutional BTC purchases also boosted the momentum.
The price of Bitcoin (BTC) briefly recovered from the $60,000 mark today, reflecting a renewed bullish sentiment in the cryptocurrency market. A variety of macroeconomic and market-specific factors contributed to this surge, bringing investors a hint of optimism. In addition, bets on the Federal Reserve cutting interest rates by 50 basis points have also increased.
Bitcoin price rebounds to $0.06 million
One of the key drivers for Bitcoin's price surge is the latest US economic data, particularly Producer Price Index (PPI) data. PPI, which measures the costs producers receive for final demand goods and services, showed a 0.3% increase in August, slightly higher than the 0.2% consensus estimate.
After deducting food and energy, the core PPI also rose 0.3%, indicating continued inflationary pressure in the economy. On a year-over-year basis, overall PPI rose 1.7%. After deducting food, energy, and trade, the core PPI increased by 3.3% per year.
Probability of the Fed cutting interest rates
Chris Larkin (Chris Larkin), managing director of electronic trading and investment at asset management company Morgan Stanley (Morgan Stanley), emphasized the consistency between PPI and CPI. He also believes that recent unemployment claim data has cleared the way for the Federal Reserve to begin a cycle of interest rate cuts.
The market is already expecting a 0.50% cut in interest rates, and the price of Bitcoin will rise as an opportunity. Now, people's attention is turning to how the Federal Reserve will cut interest rates drastically. Larkin stressed that discussions will soon focus on the speed and depth of interest rate cuts, which may play an important role in shaping market trends.
Additionally, Citibank analysts predict that the Federal Reserve will cut interest rates by 1.25% in 2024. They expect this move to coincide with lower inflation (particularly core personal consumption expenditure (PCE)) and improved labor market conditions. If inflation continues to slow and borrowing costs fall, this may drive a recovery in economic activity and provide a favorable background for risky assets such as Bitcoin.
BTC and other cryptocurrencies tend to benefit from a low interest rate environment. As inflation cools down and borrowing costs decrease, investors tend to turn to assets such as Bitcoin to hedge against inflation and take advantage of potentially higher returns. Additionally, analyst Ali Martinez's predictions for Bitcoin's price suggest that the price of BTC will reach $64,300 as it surpasses the $59,885 level.
Institutional BTC purchases soar
In addition to macroeconomic factors, institutional interest in Bitcoin has also surged. MicroStrategy, led by Executive Chairman Michael Saylor (Michael Saylor), revealed on the X platform that the company has expanded its Bitcoin holdings and purchased an additional 18,300 BTC worth $1.11 billion.
The move solidifies MicroStrategy's position as Bitcoin's largest corporate holder. Similarly, Marathon Digital Holdings, a well-known company in the Bitcoin mining sector, has increased its holdings of more than 5,000 bitcoins in the past month. This brings its total holdings to 26,200 bitcoins worth around $1.5 billion.
Furthermore, the cryptocurrency market saw a rebound in spot Bitcoin ETF inflows. These ETFs have had inflows of $0.1407 billion so far this week, up from the previous week's outflows. This positive sentiment is expected to drive up the price of Bitcoin. Additionally, Ric Edelman, founder of the Financial Professionals Digital Asset Council, has set a BTC price target of $0.42 million.