Bitcoin Value Soars in Response to Speculation over Potential Interest Rate Cuts in 2024
Summary:
Bitcoin’s value spiked to $69,483 following the Wall Street opening on June 12. This surge was prompted by the Consumer Price Index (CPI) data release and ensuing speculation about potential interest rate cuts in 2024. The increase coincided with the below-expected May CPI figure, which consequently led to speculation around Federal Reserve interest rate cuts. As Bitcoin surpassed $69,000, significant liquidation of crypto-leveraged positions ensued.
When Wall Street opened on June 12, Bitcoin (BTC) had an enthusiastic response, with its value spiking to $69,483. This surge comes as markets interpret the implications of the Consumer Price Index (CPI) data and how it could mean possible interest rate cuts in 2024. Within an hour of this data being published, BTC managed to increase by 2%, bringing its worth up by $1,760. The addition came after May’s CPI reading indicated that things were cooler than anticipated.
Bitcoin’s value was affected by May's CPI reading, which did not rise as expected but stayed level. Economists predicted a 0.1% upturn, but this was a downward trend from April's 0.3% figure, as per data from the U.S. Bureau of Labor Statistics (BLS). The annual rate was 3.3%, also below the predicted 0.1 pp.
BLS's official declaration noted an increase in the shelter index for May, which rose steadily by 0.4% for the fourth month in a row, offsetting gasoline's decline. Following the release of the CPI data, speculation began about whether the Federal Reserve would reduce interest rates in 2024. Predictions made with the CME's FedWatch tool suggest five or six cuts of 25 basis points (bps) this year. However, these predictions were down to one or two ahead of today's CPI reading, with the first cut not expected until September.
In reaction to the CPI data release, The Kobeissi Letter reported that markets have now priced in two interest rate cuts for this year. The company, known for analyzing global capital markets, observed that the likelihood of no cuts has reduced from 33% to 24% in just a few minutes.
With BTC exceeding the $69,000 benchmark, crypto-leveraged positions are being liquidated in greater numbers. Over the past 24 hours, it has been reported that $101 million worth of long cryptocurrency positions and $86 million of short positions were liquidated. In the last four hours alone, approximately $16.34 million of Bitcoin shorts were liquidated.
According to traders, they anticipate Bitcoin’s strong performance to lead to a broader market upswing. Independent analyst Moustache also endorsed the positive outlook, stating that as long as BTC stays above the 20-week exponential moving average (EMA), the price will remain bullish.
Published At
6/12/2024 7:10:40 PM
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