Bitcoin hits $68,000 after China’s unexpected rate cut
July 22, 2024
Bitcoin took a brief dive on Sunday after U.S. President Joe Biden announced he would not seek a second term. BTC’s drop led to the liquidation of $159 million worth of futures contracts, according to Coinglass.
But the pain was short-lived. The bitcoin price has now climbed back above where it was before the drop, briefly touching $68,000 early Monday morning. In fact, it’s up $68,480.36.
At the time of writing, Bitcoin has recovered to $67,284.98, but its trading volume is still 0.4% higher than this time yesterday, according to Coingecko data. Moreover, compared to the same period last week, BTC is up 7%, with a trading volume of $30.2 billion in the past 24 hours.
While Biden's withdrawal from the 2024 presidential election is undoubtedly a big catalyst for some investors, there are other macroeconomic factors at play.
The People's Bank of China (PBOC) surprised markets on Monday with an unexpected cut to its short-term policy and benchmark lending rates - a major move for the world's second-largest economy.
The announcement came as investors were looking ahead to the U.S. Federal Reserve's next Federal Open Market Committee meeting - scheduled for July 31.
About 95% of investors are now confident the FOMC will keep rates on hold in nine days, according to the CME FedWatch Tool. But nearly as many investors (92% as of Monday morning) expect the FOMC to cut rates after the committee's Sept. 18 meeting.
Bitcoin tends to view U.S. rate cuts as bullish because it makes investments like Treasury bonds less attractive. This often leads traders to allocate a larger portion of their assets to riskier categories like stocks and cryptocurrencies.
Now, traders are looking to the Bureau of Economic Analysis to release new economic indicators this week to boost their positions ahead of September.
“With important macroeconomic indicators such as U.S. GDP and PCE to be released this week, we expect market volatility to be high in the coming days,” BRN analyst Valentin Fournier wrote in a note shared with Decrypt. “The numbers could confirm an imminent rate cut, potentially fueling the current rally.”
Another factor to watch: the start of trading for the U.S. spot Ethereum ETF, which is set to begin on Tuesday, July 23, at 9:30 a.m. Eastern Time. Although this will be the debut of a spot Ethereum fund, Fournier added that it could help reinforce Bitcoin’s positive moment and send it to monthly highs.
He wrote that if this trend continues, Bitcoin could surpass $70,000 tomorrow with the launch of the Ethereum ETF. Although a parabolic acceleration for Bitcoin seems unlikely at the moment, positive ETF inflows could sustain the rally longer than previously expected.
