The trend of global central banks cutting rates is on the rise, signaling positive prospects for risk assets, including cryptocurrencies.
Bitcoin (BTC) witnessed a remarkable surge of over 7.5% on Wednesday, marking its most significant single-day gain since March 20. This surge came as weak economic data from the United States bolstered expectations of a rate cut by the Federal Reserve (Fed) in September. Furthermore, both the Bank of England (BOE) and the European Central Bank (ECB) are anticipated to implement rate cuts in June.
The sluggish U.S. economic indicators contributed to the shift in rate-cut expectations. Data from the U.S. Labor Department revealed that the consumer price index (CPI) rose less than anticipated in April, suggesting a downward trajectory in the cost of living. Additionally, retail sales growth stalled in April, with certain categories experiencing a decline.
As a result, traders are now pricing in a 25 basis point rate cut by the Fed in September, coinciding with the anticipated summer period of monetary easing. Similar expectations are held for rate cuts by the BOE and ECB in June. This trend towards monetary easing globally is seen as a positive signal for risk assets, including cryptocurrencies.
According to MacroMicro, a data tracking website, the percentage of central banks worldwide implementing rate cuts is increasing, indicating a rise in liquidity in the market. This liquidity easing over the summer is expected to support equities, providing investors with the confidence to venture further into riskier assets.
