Bitcoin Eyes New Heights as Risk Appetite Returns, Fed Rate Cuts Loom
Bitcoin is on a tear, extending its rally for a sixth consecutive day. The leading cryptocurrency is poised to break above the $72,000 resistance level, surging toward its all-time high amid a shift in market sentiment and continued weakness in US Treasury yields.
This bullish momentum comes on the back of a string of weak economic data released in the US this week. The data, which pointed towards a potential slowdown in the US economy, has boosted investor expectations of multiple interest rate cuts from the Federal Reserve later this year. This, in turn, has improved risk appetite in the market, benefiting Bitcoin and other riskier assets.
Bitcoin’s Rise
- Bitcoin gained $290 today, reaching $71,339, near a two-week high.
- This marks a 0.4% increase from yesterday’s price.
Crypto Market Heats Up
- The total market capitalization of all cryptocurrencies surged by $10 billion to $2.795 trillion, fueled by Bitcoin’s rally and gains in Ethereum.
US Treasury Yields
- US 10-year Treasury yields remain near two-month lows at 4.275%, making non-yielding assets like Bitcoin more attractive to investors.
Fed Rate Cuts on the Horizon?
- Weak US data, including a decline in manufacturing and construction spending, has increased the likelihood of multiple Fed rate cuts in 2024.
- Recent data also suggests a slowdown in job growth, easing labor market tightness.
- Following this data, market expectations for a 0.25% rate cut in September have risen to 67%, while the odds of a similar cut in November have climbed to 80%.
In summary, Bitcoin is capitalizing on a confluence of factors, including a more risk-tolerant market environment and the possibility of the Fed easing its monetary policy stance. If Bitcoin can surpass the $72,000 barrier, it could be on track to challenge its all-time high set in November 2021.
