Aug 14 2024: Bitcoin’s price surged on Wednesday, extending an overnight rebound as improved risk sentiment fueled increased speculation about a deeper U.S. interest rate cut. The focus now shifts to the upcoming inflation data.
By 01:19 ET (05:19 GMT), Bitcoin had risen by 3% to $61,024.70, recovering from the significant losses incurred during last week’s market downturn.
Despite this rebound, further gains were limited by constrained institutional inflows and ongoing uncertainty regarding cryptocurrency regulations in the U.S.
Bitcoin’s Rebound Fueled by Soft PPI Data
The rise in Bitcoin and the broader crypto market was primarily driven by softer-than-expected producer price index (PPI) data released on Tuesday. This data heightened expectations that the consumer price index (CPI) data due on Wednesday will also show easing inflation. Lower inflation would provide the Federal Reserve with more flexibility to cut interest rates.
Following the PPI data, expectations for a 50 basis point rate cut increased, although traders still considered the possibility of a 25 basis point reduction.
Lower interest rates are favorable for crypto markets as they boost liquidity that can flow into speculative assets like cryptocurrencies.
However, despite this week’s rebound, Bitcoin has remained within a trading range that has persisted for most of the year. It has struggled to surpass new highs after a March rally and has lagged behind recent stock market gains.
Regulatory Uncertainty and Mt. Gox Distributions Impact Bitcoin
Bitcoin’s recovery was also affected by reports that a wallet receiving $2 billion from the defunct Mt. Gox exchange initiated a test transaction on Tuesday. The exact amount of Bitcoin held by the exchange remains unclear, but its return of stolen tokens from a 2014 hack is expected to increase selling pressure on Bitcoin.
Crypto Prices Today: Altcoins Show Limited Gains
Overall cryptocurrency prices followed Bitcoin’s lead, but gains among major altcoins were modest. Ether, the second-largest cryptocurrency, rose by 2.6% to $2,720.45, while XRP and ADA increased by 1.8% and 0.6%, respectively. SOL decreased by 1%.
Among meme tokens, DOGE saw a slight increase of 0.4%.