Bitcoin Skyrockets: A Summer of Easing Fuels Largest Surge in Two Months!

• BTC surged more than 7.5% on Wednesday, marking its most substantial gain since March 20.

• Weak​ U.S. economic data increased ⁢the likelihood of a Fed rate cut in September.

• Both the Bank of England (BOE) and ⁣the European Central Bank (ECB) are likely to reduce rates in June.

Bitcoin (BTC) ⁢recorded ⁣its most significant daily increase⁢ in almost two months on Wednesday, as ‍disappointing ‍U.S. economic data⁣ heightened the ‌probability that the Federal Reserve (Fed) will implement rate cuts over the summer, ⁤aligning with the easing ‍policies of other major central banks.

As⁣ per data from TradingView and ⁤other sources, the leading cryptocurrency by market capitalization surged over 7.5% to $66,250. This increase is the largest percentage rise since March 20. Like other ​risk‌ assets, BTC ⁣reacts positively to ⁣anticipated changes in the monetary policies of major‌ central banks, ⁣especially when cheaper borrowing costs are expected.

U.S.‍ Labor Department ⁤data released on Wednesday indicated ‌that the consumer price index (CPI) ⁣grew less than expected in April, suggesting a continued decline in the cost of living in the U.S. economy. The headline CPI rose ⁢by 0.3% in April, following a 0.4% increase in March and February. ‌Meanwhile, the core CPI, which excludes food‍ and energy costs, also‌ grew by 0.3% in April, down ‌from March’s 0.4%⁣ increase.

Additional data revealed ⁢that⁣ headline retail sales growth stagnated in April, with the “control group” category, which is ‍factored into GDP ​calculations, declining by 0.3%⁤ month-on-month.

Consequently, expectations for a rate cut have ⁢shifted considerably. Fed ​funds futures now ⁤indicate ​that traders⁤ anticipate the Fed will implement its first 25 basis point⁣ rate cut ⁣in September. The Fed⁤ has⁤ also⁤ indicated that it ⁤plans to slow down the​ rate of quantitative tightening, another form of ⁢liquidity tightening,​ starting in June.

This trend is⁤ not isolated ⁢to​ the Fed. Markets expect ⁣that‌ the BOE and ECB will also reduce rates in June. Additionally, the​ Swiss National‌ Bank (SNB) and ⁢Sweden’s Riksbank have⁣ already lowered ‌their benchmark borrowing rates.

Global central banks are increasingly⁢ adopting more accommodative monetary policies, which bodes well for risk assets, ‌including cryptocurrencies. This trend is reflected in ​the chart below from MacroMicro, a data ⁢monitoring website.

The percentage of global central banks that have recently increased rates is rapidly declining, whereas the percentage that has cut rates is on⁢ the rise.

In simpler terms, the net proportion of central banks implementing rate cuts is increasing.

As explained by MacroMicro, “The higher⁣ this proportion, ⁢the more central banks‍ are cutting⁢ rates, which could boost market liquidity. Conversely,‌ a lower proportion signifies reduced market liquidity.”

The ⁤prospect ⁤of greater liquidity‌ easing over the summer should bolster equities, providing investors with sufficient confidence to pursue higher-risk investments, according to ​brokerage firm Pepperstone.