Fed Rate Cut Expectations Fuel Bitcoin Rally to $65,000, Bitcoin ETF Demand Recovers

Fed Rate Cut Expectations Fuel Bitcoin Rally to $65,000, Bitcoin ETF Demand RecoversFueled by signals that the Federal Reserve's rate cut is "time-appropriate," market risk appetite has rebounded, boosting demand for Bitcoin ETFs. Bitcoin touched $65,000 for the first time in about three weeks, rising 1

Fed Rate Cut Expectations Fuel Bitcoin Rally to $65,000, Bitcoin ETF Demand Recovers

Fueled by signals that the Federal Reserve's rate cut is "time-appropriate," market risk appetite has rebounded, boosting demand for Bitcoin ETFs. Bitcoin touched $65,000 for the first time in about three weeks, rising 1.2% on Monday to $65,030, before retreating to $63,712 by 1:35 PM. Last week, Bitcoin gained 7.4%, its biggest weekly gain since mid-July.

Fed Chair Jerome Powell delivered his clearest signal yet of a rate cut last Friday, and the market has fully absorbed the possibility of a September rate cut, causing a significant increase in global financial asset liquidity. This signal sparked a net inflow of $252 million into a dozen U.S. spot Bitcoin ETFs, marking seven consecutive days of inflows. This represents the highest level in over a month.

All eyes are on the Fed, said Cici Lu McCalman, founder of blockchain consulting firm VennLinkPartners, noting that a September rate cut could buoy Bitcoin.

In contrast to Bitcoin portfolios, nine ETFs holding Ethereum saw outflows for the sixth consecutive day on Thursday, with net outflows totaling $1 million. I dont think its surprising that ETF investors de-risked by cutting Bitcoin ahead of Jackson Hole, said Stephane Ouellette, co-founder of FRNT Financial. They are far from as crypto-native as crypto natives, and are playing it safe as interest rate expectations adjust. Its important to note that whatever outflows there were for Ethereum spot ETFs were just a relatively small part of the market; these funds represent about 2% of Ethereums market cap.

Since Fed Chair Jerome Powells speech at the Jackson Hole Economic Symposium, hinting at a potential slowdown in rate hikes, Bitcoin has climbed more than 10%. Analysts largely agree that the heightened expectation of a Fed rate cut has boosted market risk appetite, encouraging investors to pour money into risk assets, including Bitcoin.

The Fed's policy shift has reignited market interest in cryptocurrencies. As expectations of a Fed rate cut intensify, investor appetite for risk assets, including cryptocurrencies like Bitcoin, is increasing. Moreover, the ongoing launch of Bitcoin ETFs is creating a new investment channel for Bitcoin, attracting more institutional investors.

However, some analysts remain cautious about the cryptocurrency market, fearing that a Fed rate cut could ultimately lead to increased inflation, negatively impacting cryptocurrencies. Furthermore, global economic uncertainties could also influence the cryptocurrency market.

Despite some risks, the current outlook presents a positive signal for the Bitcoin market, fueled by Fed rate cut expectations and the resurgence of demand for Bitcoin ETFs. Going forward, Bitcoin's price trajectory will be influenced by the Feds policy course and the overall state of the global economy.

It's important to note that this information is for informational purposes only and not intended as investment advice. Investors should make investment decisions based on their own risk tolerance.