Bitcoin (BTC) surged above $114,000 on a strong rally. This surge was fueled by the weaker-than-expected August Producer Price Index (PPI) and last week’s downwardly revised employment data, along with the growing likelihood of a Fed rate cut.
According to the Chicago Mercantile Exchange’s (CME) FedWatch tool, there’s a 90% chance of a rate cut at the meeting on September 17. Rate cuts can generally create a supportive environment for risky assets, giving markets, including cryptocurrencies, upward momentum.
Market analysis platform Tephra Digital, in an assessment on X (formerly Twitter), stated, “If Bitcoin maintains its lagging correlation with M2 money supply and gold prices, it could rise to the $167,000-$185,000 range by the end of the year.” This suggests that Bitcoin is more sensitive to macroeconomic environments with relatively high liquidity.
Meanwhile, with the resurgence of Trump-era stimulus policies in the markets, the Fed’s interest rate policy in the second half of the year stands out as a critical variable for the future of cryptocurrency markets. Experts warn that the Fed’s monetary policy direction and the speed with which key economic indicators are reflected in the market should be closely monitored.
*This is not investment advice.