Bitcoin, the world’s largest cryptocurrency by market capitalization, has once again made headlines by breaking past $41k, a mark it hasn’t seen since April 2022 (before the Terra crisis). The driving force behind this momentum is the recent series of interest rate cuts made by central banks worldwide.
Daily Chart of BTC/USDT Source: Trading View
Central banks have begun a familiar move, slashing interest rates and embracing ultra-easy policy. This approach aims to boost economic growth by making borrowing cheaper, encouraging a greater inflow of funds into various markets. This scenario is similar to what happened during the COVID-19 pandemic in 2020 when the government lowered interest rates and the value of bitcoin surged. The ultra easy policy is usually a good indicator for high-risk investments such as cryptocurrencies.
Moreover, the anticipation surrounding the speculated launch of bitcoin exchange-traded funds (ETFs) in January 2024 has contributed significantly to this heightened optimism. This upcoming event is being hailed as one of the most eagerly awaited ETF launches in history, expected to provide institutional investors with a regulated and accessible channel to invest in bitcoin.
Bitcoin Market Sentiment
The market’s bullish outlook is not solely based on central bank actions but is rather a convergence of factors. The proactive steps taken by these financial institutions, including interest rate cuts, have indeed supported the overall market sentiment. However, the primary motivator for Bitcoin’s rally remains its solid fundamentals, increased adoption, and the anticipated prospect of ETFs.