Bitcoin Snaps Two-Day Slide Amid Renewal of Risk Appetite

(Bloomberg) — Bitcoin pared a two-day slide as renewed expectations for U.S. interest rate cuts boosted demand for risky assets.

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The largest cryptocurrency gained as much as 3.5% to $69,642 as signs of easing inflation supported bets that the Fed would cut interest rates this year. Smaller cryptocurrencies such as Ether, Solana and Dogecoin also rallied.

“FalconX saw significant buying on both spot and derivatives desks during yesterday’s over 3% sell-off,” said Ravi Doshi, market head at premier broker FalconX. “Those bets paid off.”

Shares of crypto-related companies also rose. Crypto exchange Coinbase Global Inc. As it rose as much as 6%, Bitcoin proxy MicroStrategy Inc. It rose up to 6.9%.

Bitcoin reached a record of $73,798 in mid-March, driven by inflows into private funds traded on the US stock exchange. However, it had difficulty reaching new peaks due to changing interest rate expectations in the last three months.

The core consumer price index, which excludes food and energy costs, rose 0.2 percent from April, according to figures from the Bureau of Labor Statistics. The annual measure rose 3.4%, the slowest pace in more than three years, according to data released Wednesday.

“These data make a good preparation for the Fed to cut interest rates as early as July,” Doshi said.

The policymaking Federal Open Market Committee is expected to keep its benchmark interest rate steady at its seventh consecutive meeting on Wednesday as it awaits more evidence that inflation is still heading toward its 2% target. The interest rate decision and forecasts will be announced at 14:00 in Washington. Fed Chairman Jerome Powell will hold a press conference in 30 minutes.

“Crypto is now a mature asset class and, similar to broader markets, we should expect increases when indicators such as the CPI indicate interest rate cuts could occur in the not-too-distant future,” said Michael Safai, co-founder of quantitative trading firm Dexterity. Capital city.

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