Bitcoin price hit $60,000 today, influenced by US PPI data and the Fed's 50 basis point rate cut. Institutional BTC purchases also boosted momentum.
Bitcoin (BTC) prices briefly reclaimed the $60,000 mark today, reflecting renewed bullish sentiment in the cryptocurrency market. Multiple macroeconomic and market-specific factors contributed to the surge, providing a glimmer of optimism among investors. Additionally, bets on a 50 basis point rate cut by the Federal Reserve have increased.
Bitcoin price rebounds to $60,000
One of the key drivers of the Bitcoin price surge was the latest U.S. economic data, specifically the Producer Price Index (PPI) data. The PPI, which measures the cost producers receive for final-demand goods and services, showed an increase of 0.3% in August, slightly above the consensus estimate of 0.2%.
Excluding food and energy, the core PPI also rose by 0.3%, indicating continued inflationary pressures in the economy. Year-on-year, the headline PPI rose by 1.7%. Excluding food, energy and trade, the core PPI rose by 3.3% year-on-year.
Probability of Fed rate cut
Chris Larkin, managing director of electronic trading and investments at asset manager Morgan Stanley, highlighted the consistency between PPI and CPI and believes that recent jobless claims data clears the way for the Federal Reserve to begin a rate-cutting cycle.
The market has already expected a 0.50% rate cut, and Bitcoin prices will also take advantage of it. Now, people's attention turns to how drastically the Federal Reserve will cut interest rates. Larkin emphasized that the discussion will soon focus on the speed and depth of rate cuts, which may play an important role in shaping market trends.
Additionally, Citi analysts predict that the Fed will cut interest rates by 1.25% in 2024. They expect this move to coincide with cooling inflation, especially core personal consumption expenditures (PCE), and improving labor market conditions. If inflation continues to slow and borrowing costs fall, this could drive a recovery in economic activity, providing a favorable backdrop for risk assets such as Bitcoin.
BTC and other cryptocurrencies tend to benefit from a low interest rate environment. As inflation cools and borrowing becomes less expensive, investors tend to turn to assets like Bitcoin to hedge against inflation and take advantage of potentially higher returns. Additionally, analyst Ali Martinez’s Bitcoin price prediction suggests that BTC will reach $64,300 as it surpasses the $59,885 level.
Institutional BTC purchases surge
In addition to macroeconomic factors, institutional interest in Bitcoin has also surged. MicroStrategy, led by Executive Chairman Michael Saylor, revealed on the X platform that the company has expanded its Bitcoin holdings, purchasing an additional 18,300 BTC worth $1.11 billion.
The move solidifies MicroStrategy’s position as the largest corporate holder of Bitcoin. Similarly, Marathon Digital Holdings, a well-known company in the Bitcoin mining space, has added more than 5,000 Bitcoins in the past month. This brings its total holdings to 26,200 Bitcoins, worth approximately $1.5 billion.
In addition, the cryptocurrency market has seen a rebound in inflows into spot Bitcoin ETFs. So far this week, these ETFs have seen inflows of $140.7 million, a rebound from outflows in the previous week. This positive sentiment is expected to push up Bitcoin prices. In addition, Ric Edelman, founder of the Digital Asset Council for financial professionals, set a BTC price target of $420,000.
