Cryptocurrency's Bitcoin price surpasses $114K, coinciding with a 8-week high in ETF investments inflow.
The Federal Reserve (Fed) finds itself under pressure to cut interest rates due to worsening jobs data releases over July and August. This pressure, coupled with the ongoing inflation concerns, has created a volatile stock market environment.
According to the U.S. Federal Reserve itself, its monetary policy, including interest rate decisions, directly affects liquidity and investment flows into assets like bitcoin and bitcoin price. Institutional investors and digital asset treasuries are also key players, but the Fed's policy is central to these stock market today dynamics.
On Thursday morning, bitcoin reached a two-week high of $114,000. This surge is an "encouraging sign" according to DarkFrost, a pseudonymous verified analyst at CryptoQuant. The price rise in bitcoin was observed after U.S. spot bitcoin price ETF saw inflows of $757.1 million on Wednesday, marking an eight-week high for U.S. spot btc price ETF.
The inflows in U.S. spot bitcoin price usd ETF were driven by the better-than-expected Producer Price Index (PPI) numbers. This suggests that investors are looking to bitcoin as a safe haven asset during times of economic uncertainty.
Stephen Gregory, founder of crypto trading platform Vtrader, believes that the bitcoin's ETF inflows might be driven by the speculation on a half-point rate cut. This speculation is reflected in the CME's FedWatch tool, which shows 92% odds of a 25 basis point rate cut and an 8% chance of a 50 basis point rate cut. Users of Myriad, a prediction market launched by Decrypt's parent company DASTAN, put an 80% chance on the Fed cutting interest rates by 25bps.
However, not all digital assets are experiencing positive inflows. Ethereum funds are experiencing a negative netflow of $668.72 million for September. This could indicate a shift in investor sentiment towards bitcoin over Ethereum.
Illia Otychenko, lead analyst at CEX.IO, suggested that funds are "shifting back into bitcoin from Ether" in anticipation of the September 17 Fed rate cut decision. This trend is further supported by the data showing that U.S. ETFs have accumulated $1.39 billion worth of bitcoin in September.
As the Fed prepares to make its decision, the market will be closely watching for any signs of further stimulus. The uptrend in bitcoin was accompanied by a 6.60% rise in open interest to $43.3 billion and positive funding rates, indicating a growing confidence in the digital asset. Whether this confidence will be rewarded remains to be seen as the Fed makes its decision.
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