Bitcoin Rises 7.5% as Global Central Banks Ease Easing Measures - Latest Global News

Bitcoin Rises 7.5% as Global Central Banks Ease Easing Measures

Bitcoin (BTC) posted its biggest daily gain in nearly two months on Wednesday, rising over 7.5% to $66,250.

The development follows recent reports that El Salvador’s Bitcoin holdings have reached 5,750 BTC – worth over $378 million at press time. Twitter founder Jack Dorsey recently predicted that Bitcoin will reach $1 million within the next six years.

The rally, which represents the largest percentage increase since March 20, comes at a time when weak U.S. economic data has increased the likelihood that the Federal Reserve (Fed) will join other developed nations in easing monetary policy by cutting interest rates summer months.

The U.S. Labor Department reported that the consumer price index (CPI) rose less than expected in April, pointing to another decline in the cost of living. The headline CPI rose 0.3% last month after rising 0.4% in March and February. The core CPI, which excludes food and energy prices, also rose 0.3% in April after rising 0.4% in March. Additionally, retail sales growth stalled in April, with sales in the “control group” category included in the GDP calculation falling 0.3% month-on-month.

These weak economic indicators have significantly shifted expectations of a rate cut. Fed fund futures suggest traders expect the Fed to implement its first rate cut of 25 basis points in September. The Fed has also signaled its intention to slow the pace of quantitative tightening, another liquidity tightening tool, starting in June.

A global change

The Fed is not alone in this transition to monetary easing. Markets expect the Bank of England (BOE) and the European Central Bank (ECB) to cut interest rates in June, while the Swiss National Bank (SNB) and the Swedish Riksbank have already cut their key rates.

The increasing trend of central banks around the world to ease monetary and liquidity policies again is a positive sign for risk assets, including cryptocurrencies. According to data from MacroMicro, the share of global central banks whose last move was a rate hike is falling rapidly, while the share of banks whose last move was a rate cut is rising. This suggests that the net percentage of central banks cutting interest rates is increasing, which could help improve market liquidity.

As prospects of liquidity easing grow over the summer, stocks are likely to find support, giving investors confidence to stay further out on the risk curve, according to brokerage firm Pepperstone.

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