Originally published on: August 01, 2024
Amidst the Bank of England’s recent interest rate cut announcement, speculations abound that the Bitcoin price could experience an upward surge in the near future.
Bank of England’s Surprise Interest Rate Cut and its Impact on Bitcoin
The Bank of England’s decision to cut interest rates by 0.25% to 5%, marking the end of a prolonged period of elevated rates, has sparked a debate among economists. This surprising move could potentially benefit the Bitcoin price, as history shows that easing monetary policy tends to bolster risk-on assets like Bitcoin and gold.
Despite the interest rate cut, Bitcoin’s price remains largely range-bound, failing to break above the $65,000 threshold. The sluggish price action is puzzling, given the potential tailwinds from the surprise rate cut in the UK, the first in over four years.
Market Analysis and Possible Influencing Factors
The price of Bitcoin experienced a minor 2.4% decline in the 24 hours leading up to Aug. 1, trading at $64,507. This downward movement came after a relatively flat week, according to data from CoinMarketCap. Notably, the Federal Reserve’s decision to maintain its key lending rates in August may have contributed to Bitcoin’s lackluster performance.
Future Prospects for Bitcoin Price and US Rate Cut Speculations
Looking ahead, market analysts at Bitfinex suggest that a potential rate cut by the US Federal Reserve in September could inject fresh liquidity and drive upward momentum for Bitcoin. This sentiment aligns with the belief that US ETF inflows play a significant role in shaping Bitcoin’s price trajectory.
The recent lackluster performance in US-based spot Bitcoin exchange-traded funds (ETFs) raises concerns. Data from Farside Investors shows that these ETFs recorded a meager $300,000 worth of Bitcoin inflows on July 31, coupled with significant net outflows exceeding $18.3 million on July 30.
The Role of ETF Inflows in Driving Bitcoin’s Price
ETF inflows are crucial factors that can propel a cryptocurrency’s price appreciation. For Bitcoin, ETFs accounted for approximately 75% of new investments when it surpassed the $50,000 milestone earlier this year, highlighting their significance in influencing market sentiment and price dynamics.
Moving forward, as global economic uncertainties persist, the interplay between central bank policies and Bitcoin’s price performance will continue to dominate market discussions and influence investor sentiment.
Ethereum Price Forecast amidst Bitcoin’s Dominance
While Bitcoin’s future remains uncertain, experts predict that Ethereum’s price may lag behind Bitcoin for the coming months, a dynamic worth monitoring closely as the cryptocurrency market evolves.
