Key facts:
Bitcoin remains around $56,000.
Interest rate cuts would be beneficial for volatile assets such as bitcoin.
The inflation in the United Statesthe world’s leading financial power, fell in August to the lowest level in more than three yearswhich could open the door to an interest rate cut by the Federal Reserve. This scenario, which is anticipated for the September 18 meeting, is seen by many analysts as a possible catalyst for the increase in the price of bitcoin (BTC) in the medium term.
Moments ago, the Department of Labor reported that The consumer price index (CPI) rose a modest 0.25% in August compared to the previous month, a figure slightly lower than market expectations of an increase of 0.26%.
This cooling of inflation reinforces the position of those who support the reduction of interest rates, arguing that it is necessary to encourage more spending and investment.
Why is this data bullish for bitcoin?
A cut in interest rates would have a double impact on the financial market, which would indirectly, may benefit volatile assets like bitcoin.
On the one hand, lower rates make the cost of borrowing lower, which encourages investors and businesses to borrow. This money is often channeled into investments that provide higher returns than the interest paid on the loans, creating a flow of capital into stock markets and, increasingly, into cryptocurrencies.
On the other hand, when interest rates fall, Treasury bond yields (considered “the safest investment in the world”) also tend to decline. This makes bonds less attractive to investors seeking higher returns, leading them to seek more profitable and often more volatile alternatives. Bitcoin, known for its high volatility but also for its potential for high gains, thus becomes an attractive candidate for these investors.
Moreover, expansionary monetary policy, characterized by low interest rates and increased liquidity, tends to weaken the currency in question — in this case, the U.S. dollar. A weaker dollar can make dollar-denominated assets, such as bitcoin, more attractive to international investors, which could further boost its price.
At the moment, as can be seen in the CryptoNews Calculator, Bitcoin price remains around $56,000without major movements after the announcement of the Department of Labor.
